The euro continued to tumble throughout yesterday’s trading session as investors grew more concerned regarding the impact of a possible new Greek election next month. The EUR/USD fell close to 70 pips during European trading, reaching as low as 1.2829. Today, traders will want to pay attention to several potentially significant market events. At 9:00 GMT, the German ZEW Economic Sentiment figure may be able to help the euro recover some of its recent losses if it comes in above analyst forecasts. In addition, the US Core CPI, Core Retail Sales and Retail Sales figures, all scheduled for 12:30 GMT, could lead to market volatility for USD pairs. Should any of the news come in above expectations, the greenback could move up against the JPY.
Forex Market Trends
USD – US Retail Sales Data Set to Generate Volatility
The US dollar saw significant gains against its higher-yielding currency rivals yesterday, as investor concerns regarding the political situation in Greece and Germany led to risk aversion in the marketplace. In addition to the EUR/USD dropping to a four-month low, the greenback also extended its recent gains against the Australian and New Zealand dollars. The AUD/USD fell below the 1.0000 level for the first time since last December during the early morning session. The pair fell as low as 0.9961 before stabilizing. The NZD/USD tumbled close to 60 pips, reaching as low as 0.7763 before staging a slight upward correction during the afternoon session.
Turning to today, USD traders will want to pay attention to the results of the US Retail Sales and Core Retail Sales figures, scheduled to be released at 12:30 GMT. Both indicators are forecasted to come in significantly below last month’s figures, which if true, may lead to investor concerns that the US economic recovery is slowing down and cause the dollar to fall against the Japanese yen. At the same time, with the euro-zone political and economic situation still dominating the news, the dollar may be able to extend its gains against the euro during today’s trading session.
EUR – Poor Industrial Production Figure Causes Euro to Slide
The euro took additional losses against its main currency rivals during yesterday’s trading session following the release of a disappointing euro-zone industrial production figure. The figure came in at -0.3%, well below the 0.5% result analysts had been predicting. Following the news, the euro dropped over 40 pips against the US dollar, eventually hitting a new four-month low. Against the British pound, the euro dropped close to 50 pips, eventually reaching as low as 0.7983 during the afternoon session.
Today, euro traders will want to pay attention to the German ZEW Economic Sentiment figure at 9:00 GMT. As the biggest economy in the euro-zone, indicators out of Germany tend to have a significant impact on euro pairs. Should the figure come in above the forecasted 19.1, the common currency may be able to stage a mild recovery during the European session. Furthermore, if any of today’s news out of the US comes in below expectations, the euro could see bullish movement against the US dollar.
JPY – Risk Aversion Boosts Yen
The Japanese yen maintained its upward momentum vs. the euro and US dollar in trading yesterday as investors flocked to safe-haven assets amid political instability in the euro-zone. The EUR/JPY fell close to 100 pips during European trading, reaching as low as 102.20. After slight upward movement during the overnight session, the USD/JPY once again turned bearish, dropping 50 pips before stabilizing around the 79.70 level.
Turning to today, traders will want to monitor news out of the euro-zone and US. With investors still focused on the political instability in Greece, the yen could see additional gains if any additional negative news out of the euro-zone is released today. Furthermore, the US Retail Sales and Core Retail Sales are forecasted to come in below last month’s figures, which if true, could help the yen against the dollar.
Crude Oil – Crude Oil Drops Below $94 a Barrel
Crude oil took additional losses in trading yesterday, as investors continue to flee riskier assets due to negative euro-zone news. Fears that the political situation in Greece will result in new elections next month was the main reason for risk aversion in the marketplace. As a result, the price of oil fell over $2 a barrel during European trading, reaching $93.61, a new low for 2012.
Turning to today, analysts are warning that the price of oil could fall further unless some form of stability returns to Europe. Investors are all but certain that Greece will need to hold a new election in June, which increases the chance that the country will eventually leave the euro-zone. That being said, should the German ZEW Economic Sentiment figure come in above expectations, risk taking could return to the marketplace which could help oil recoup some of its losses.
The weekly chart’s Williams Percent Range has dropped into oversold territory, indicating that this pair could see upward movement in the coming days. This theory is supported by a bullish cross on the daily chart’s Slow Stochastic. Opening long positions may be a wise choice for this pair.
The Bollinger Bands on the daily chart are narrowing, indicating that this pair could see a major shift in price in the near future. That being said, most other long term technical indicators are not providing clear signs as to what direction the shift will be. Taking a wait and see approach may be the best choice for this pair.
A bullish cross on the weekly chart’s Slow Stochastic points to a possible upward correction in the coming days. This theory is supported by a bullish cross on the daily chart’s MACD/OsMA. This may be a good time for traders to open long positions.
The Relative Strength Index on the daily chart is approaching the overbought zone, indicating that this pair could see downward movement in the near future. Additionally, the Williams Percent Range on the weekly chart has crossed above the -20 line. Traders may want to go short in their positions ahead of a possible bearish correction.
The Wild Card
The daily chart’s Slow Stochastic has formed a bearish cross, indicating that this pair could see downward movement in the near future. Furthermore, the Relative Strength Index on the same chart has crossed into overbought territory. Forex traders may want to open short positions ahead of a possible downward correction.
Written by Forexyard.com