Greek Political Impasse Leads to Euro Losses

The euro started off yesterday’s trading session on a positive note following a better than expected German Prelim GDP figure which caused the EUR/USD to advance to 1.2868. That being said, the common currency came under pressure later in the day following another failed attempt by Greek politicians to form a new government, virtually guaranteeing new elections will take place next month. As a result, the euro fell as low as $1.2769 during the afternoon sessoin. Turning to today, traders will want to pay attention to the US FOMC Meeting Minutes, set to be released at 18:00 GMT. Any signs that the Federal Reserve is preparing for another round of quantitative easing could result in the greenback turning bearish.

Forex Market Trends

Daily Trend down down up up down down
Weekly Trend down down up up down down
Resistance 1.2800 1.6050 81.20 0.9520 0.9990 0.8045
1.2780 1.6030 81.00 0.9500 0.9970 0.8025
1.2750 1.6000 80.70 0.9470 0.9940 0.7995
Support 1.2690 1.5940 80.10 0.9410 0.9880 0.7935
1.2660 1.5910 79.80 0.9380 0.9850 0.7905
1.2640 1.5890 79.60 0.9360 0.9830 0.7885

Economic News

USD – US Manufacturing Data Sends USD/JPY Over 80.00

The combination of a better than expected US Empire State Manufacturing Index and additional Greek political worries gave the US dollar a boost against its main currency rivals during yesterday’s trading session. The EUR/USD fell close to 100 pips over the course of the European session, reaching as low as 1.2769 before staging a slight upward correction. Against the Japanese yen, the dollar was able to advance over 80.00 following the better than expected manufacturing report. Overall the USD/JPY was up over 20 pips during European trading.

Turning to today, dollar traders will want to several pieces of US news, including the Building Permits figure and FOMC Meeting Minutes. Should the building permits data come in above the forecasted 0.73M, the greenback may be able to advance further against the JPY. That being said, any gains the dollar makes could be short lived depending on if the FOMC hints at any future plans to initiate a new round of monetary easing to help boost the US economy.

EUR – Euro Extends Bearish Trend amid Additional Greek Problems

The inability of Greek politicians to form a new government resulted in calls for a new election, which increased investor fears that Greece could default on its debt and have to exit the euro-zone. In addition to losses taken against the US dollar, the common currency also fell against the safe-haven Japanese yen and British pound. The EUR/JPY dropped over 70 pips during the European session, reaching as low as 102.15. The EUR/GBP was down over 40 pips, reaching 0.7969 before staging a slight reversal late in the day.

Today, euro traders will want to pay attention to a speech from European Central Bank President Draghi, scheduled for 14:00 GMT. Given the recent political turmoil in Greece, investors will be carefully watching to see if the ECB President will say anything about the country’s chances of remaining in the euro-zone. Additionally, traders will also want to pay attention to the US FOMC Meeting Minutes. Any indication that the Fed is taking additional steps to boost the US economic recovery could help the euro recoup some of its recent losses against the greenback.

AUD – Risk Aversion Leads to Significant Aussie Losses

After seeing mild gains during early morning trading, the Australian dollar turned bearish against both the US dollar and Japanese yen amid risk aversion in the marketplace caused by Greek political worries. The AUD/USD dropped from a high of 1.0014 to 0.9952 over the course of the day. Against the JPY, the aussie fell over 50 pips, reaching as low as 79.59 before staging an upward correction. The AUD/JPY eventually settled around 79.95 during the afternoon session.

Today, traders will want to monitor any developments in the euro-zone, particularly with regards to the current crisis in Greece. Fears that the country will default on its debt and have to exit the euro-zone could lead to additional risk aversion in the marketplace, in which case the AUD could see further losses during the second half of the week.

Crude Oil – US Inventories Set to Impact Price of Crude Oil

After moving up as high as $95.44 a barrel, the price of crude oil turned bearish after investors began abandoning riskier assets amid Greek political concerns. The commodity fell as low as $94.30 before staging a slight upward correction and stabilizing around the $94.80 level.

Today may lead to additional volatility for crude oil, as investors continue to digest euro-zone news and its potential impact on the marketplace. In addition, the US Crude Oil Inventories figure could lead to additional losses if it comes in above expectations. US crude stockpiles are already near record highs, which analysts have interpreted as a sign of weaker demand in the world’s largest oil consuming country. Should today’s news come in above the forecasted 1.5M, oil may move downward.

Technical News

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

Crude Oil
After steadily dropping over the last several weeks, technical indicators are now showing that crude oil is in oversold territory and could see an upward correction. A bullish cross has formed on the daily chart’s Slow Stochastic, while the Relative Strength Index has dropped below 30. Forex traders may want to go long in their positions ahead of a possible upward breach.

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