Greek Elections Lead to Significant Euro Losses

The results of Greek parliamentary elections held over the weekend kept the euro low against virtually all of its main rivals throughout yesterday’s trading session. Investor concerns about Greece’s new government and how it will act toward tough austerity measures imposed on the country brought the euro down to a 3 ½ year low against the British pound and a three-month low against the US dollar. Turning to today, euro-zone news is once again forecasted to impact the markets. The German Industrial Production figure and a speech from the ECB President have the potential to create significant volatility.

Forex Market Trends

Daily Trend up up up down up up
Weekly Trend down up up up up down
Resistance 1.3156 1.6284 81.41 0.9317 1.0298 0.8189
1.3107 1.6229 80.83 0.9270 1.0253 0.8154
1.3078 1.6195 80.48 0.9244 1.0225 0.8120
Support 1.3030 1.6140 79.91 0.9201 1.0181 0.8067
1.3001 1.6106 79.56 0.9175 1.0153 0.8036
1.2954 1.6051 78.98 0.9133 1.0108 0.8001

Economic News

USD – USD Takes Slight Losses against Main Currency Rivals

After seeing significant gains when markets opened for the week, the US dollar staged a minor downward correction during European trading yesterday. After dropping to 1.2953, a three-month low, the EUR/USD began moving upward during early morning trading, reaching as high as 1.3052 by the afternoon. The AUD/USD also saw some upward movement during the European session. The pair was up close to 90 pips by the afternoon session, reaching as high as 1.0196. Against the Japanese yen, the dollar remained virtually unchanged at around 79.80 over the course of the day.

Turning to today, a lack of significant US news means that any dollar volatility will likely come as a result of euro-zone news. Traders will want to pay close attention to a speech from the ECB President, scheduled for 12:30 GMT. Should investors interpret the speech as negative for euro-zone growth, investors may return to safe-haven currencies which could result in renewed bullish activity for the dollar. Later in the week, traders will want to remember that the Fed Chairman is scheduled to give a speech. Following last week’s disappointing US jobs report, investors will be listening to the speech for any clues regarding any future plans for quantitative easing in the US.

EUR – EUR Remains Low amid Euro-Zone Worries

Investor concerns that the new Greek government will back away from previously agreed upon austerity measures sent investors to safe-haven assets, resulting in heavy losses for the euro to start off the week. The common-currency fell to a 3 ½ year low against the British pound, hitting 0.8034 during early morning trading. The EUR/GBP eventually staged a minor upward reversal, and by the afternoon session was trading as high as 0.8078. Against the Japanese yen, the euro fell over 125 pips during the overnight session, reaching as low as 103.20. The pair eventually recovered during mid-day trading to trade as high as 104.30.

Turning to today, traders will want to pay attention to both the German Industrial Production figure at 10:00 GMT, followed by a speech from ECB President Draghi at 12:30. As the biggest economy in the euro-zone, German indicators tend to have a significant impact on the euro. Should today’s news come in above the forecasted 0.8%, the euro could see moderate upward movement during the mid-day session. With regards to the ECB President’s speech, traders will want to pay attention to any mention of how the recent elections will impact euro-zone economic growth. Any negative comments could result in euro losses.

Silver – Weak Global Data Leads to Bearish Movement for Silver

Silver fell as low as $29.85 an ounce during yesterday’s trading session as poor fundamental data resulted in weak demand for the precious metal. Specifically, uncertainty regarding the prospects of the euro-zone recovering from its sovereign debt crisis led to the bearish movement. Overall, silver was down around $0.50 during European trading.

Turning to today, silver may continue to fall if poor euro-zone fundamental data results in risk aversion in the marketplace. Traders will want to pay attention to a speech from the ECB President for clues as to how this past weekend’s elections may impact the euro-zone economic recovery. Any negative comments could result in additional losses for the precious metal.

Crude Oil – Euro-Zone Worries Result in Losses for Crude Oil

Concerns regarding the euro-zone’s ability to solve its debt crisis in the aftermath of elections in France and Greece over the weekend resulted in additional losses for crude oil during yesterday’s trading session. During overnight trading, crude dropped an additional $2.25 a barrel, reaching as low as $95.24. While the commodity saw minor gains during the middle of the day, it was once again moving down toward the end of the European session.

Today, traders will want to continue monitoring any developments out of the euro-zone. Any signs that the new Greek government will go back on any of the austerity measures it promised to undertake before receiving its most recent bailout package may result in additional bearish movement for oil.

Technical News

The Williams Percent Range on the weekly chart has dropped into oversold territory, indicating that this pair could see upward movement in the coming days. Furthermore, the MACD/OsMA on the same chart appears to be forming a bullish cross. Traders will want to keep an eye on this pair, as it could stage an upward correction in the near future.
A bearish cross has formed on the weekly chart’s Slow Stochastic, in a sign that downward movement could occur for this pair. In addition, another bearish cross on the daily chart’s MACD/OsMA is providing further evidence of an impending correction. Traders may want to go short in their positions.
Most long term technical indicators place this pair in neutral territory, meaning that no definitive trend can be predicted at this time. The one exception is the weekly chart’s MACD/OsMA, which has formed a bearish cross. Traders will want to keep an eye on some of the other indicators on the weekly chart for signs of an impending downward correction.
The Williams Percent Range on the weekly chart has crossed over into overbought territory, indicating that this pair could see downward movement in the near future. Furthermore, the Relative Strength Index (RSI) on the same chart is moving upward and appears poised to cross into the overbought zone as well. Traders will want to keep an eye on the RSI. If it crosses above 70, it may be a good time to open short positions.

The Wild Card

Following the significant downward movement this pair has seen recently, technical indicators now show that an upward correction could take place in the near future. The daily chart’s Relative Strength Index has dropped into oversold territory, while the Slow Stochastic on the same chart has formed a bullish cross. Forex traders may want to go long in their positions.

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