EUR Stages Slight Recovery, US Data Set for Today

The euro saw mild upward movement during yesterday’s trading session, as gains in stocks drove investors toward riskier assets. That being said, analysts are warning that debt worries in Spain and Portugal still have the potential to negatively impact the common currency in the coming days. Today, a batch of US fundamental data is forecasted to generate market volatility. Traders will want to pay attention to this week’s Unemployment Claims as well as the Trade Balance and PPI figures, all scheduled for 12:30 GMT. Positive news may help the USD recoup some of its recent losses.

Forex Market Trends

Daily Trend up up up down up no
Weekly Trend down down down up up down
Resistance 1.3220 1.6005 81.75 0.9230 1.0455 0.8330
1.3200 1.5985 81.55 0.9210 1.0435 0.8310
1.3170 1.5955 81.25 0.9180 1.0405 0.8280
Support 1.3110 1.5895 80.65 0.9120 1.0345 0.8220
1.3080 1.5865 80.35 0.9090 1.0375 0.8190
1.3060 1.5845 80.15 0.9070 1.0355 0.9170

Economic News

USD – Dollar Extends Losses vs. Riskier Currencies

The US dollar extended losses against its riskier currency rivals during yesterday’s session, including the euro and British pound. The EUR/USD was up some 90 pips for the day, reaching as high as 1.3155 before staging a downward correction. The pair eventually stabilized around 1.3120. The GBP/USD was up over 80 pips during mid-day trading, reaching as high as 1.5937. Against the Japanese yen the dollar saw slight upward movement, going as high as 80.94, but remained near its recent one-month low for most of the day.

Turning to today, traders will want to note the results of the US Unemployment Claims, Trade Balance and PPI figures, all scheduled to be released at 12:30 GMT. All three indicators are forecasted to show growth in the US economy, which if true, could help the USD rebound from its recent bearish trend. Of course, if any of the indicators come in significantly below their expected levels, the dollar could continue the downward trajectory it began following last week’s disappointing Non-Farm Payrolls figure.

EUR – Euro Sees Mild Bullish Movement

A slow news day yesterday led to few surprises in the marketplace. Still, the euro saw mild bullish movement against several of its main currency rivals, as gains in international stocks led to some risk taking. In addition to the gains made by the EUR/USD, the EUR/JPY was up about 80 pips for the day. The pair reached as high as 106.36 during the afternoon session. Upward movement was also seen vs. the Canadian dollar. The EUR/CAD was trading at 1.3170 for much of the day, up close to 50 pips for the day.

Turning to today, analysts are warning that debt worries out of the euro-zone are likely to continue weighing down on the common currency, and may result in the euro reversing yesterday’s upward movement. In addition, should any of the US news set to be released today signal increased momentum in the US economic recovery, the EUR/USD may turn bearish as we begin to close out the week.

JPY – Yen Reverses Some of its Recent Gains

While the Japanese yen remained close to a recent one-month high vs. the US dollar during trading yesterday, the currency saw downward movement against several of its other rivals throughout the day. The AUD/JPY, which saw significant bearish activity earlier in the week, was up over 100 pips by the afternoon session. In addition, the CHF/JPY was up close to 80 pips for the day, reaching as high as 88.68.

Today, investors will be carefully monitoring a batch of US fundamental news. Should any of the indicators show growth in the US economy, the USD/JPY may turn bullish during the afternoon session. Additionally, any positive news could result in increased risk taking in the marketplace, in which case higher yielding assets like the AUD and GBP could move up vs. the yen.

Crude Oil –

Crude oil remained below the $102 a barrel level throughout yesterday’s trading session, as poor US fundamentals, combined with a reduction in tensions between Iran and the West drove the price of the commodity lower. A decrease in demand for oil in the US, highlighted by a surge in crude oil inventories and disappointing employment data, have caused prices to plummet in recent days.

Furthermore, with Iran scheduled to begin a new round of negotiations with the West regarding its disputed nuclear program, fears that the conflict could escalate militarily have subsided for the time being. The news has caused supply side fears to go down which has resulted in a decrease in prices.

Turning to today, oil traders will want to pay attention to the weekly US Unemployment Claims figure. Positive news may help restore faith in the US economic recovery and could result in some risk taking in the marketplace, in which case oil could turn bullish.

Technical News

Long term technical indicators show that this pair is trading in neutral territory at the moment, meaning that no definitive direction is known at this time. Traders may want to take a wait and see approach, as a clearer picture is likely to present itself in the near future.
The weekly chart’s Williams Percent Range is currently at -20. Typically, this is taken as a sign that the pair is in overbought territory and could see a downward correction. Traders may want to go short in their positions, as bearish movement could occur in the near future.
Technical indicators on the daily chart show that the USD/JPY has entered the oversold territory and may see an upward correction in the near future. These include the Slow Stochastic, which has formed a bullish cross, and the Williams Percent Range, which is currently at -90. Going long may be the wise choice for this pair.
Technical indicators on both the daily and weekly charts are showing that this pair is range trading at the moment, meaning that no definitive trend is known. Taking a wait and see approach for this pair may be a wise choice, as a clearer picture is likely to present itself.

The Wild Card

A bearish cross on the daily chart’s Slow Stochastic indicates that this pair may see a downward correction in the near future. This theory is supported by the Williams Percent Range on the same chart, which is at -20. Forex traders may want to go short in their positions ahead of a possible bearish move.

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