EUR Resumes Bearish Trend

After steadily gaining on the dollar and yen yesterday in overnight trading, the euro once again turned bearish during the European session. Renewed concerns regarding the political situation in Greece triggered the bearish correction. Still, the common currency was able to avoid dropping to the four-month low hit last week. Turning to today, traders will want to pay attention to a batch of British and US economic indicators. Both the British CPI and Public Sector Net Borrowing figures are forecasted to come in well below last month’s figures. If true, the GBP could take losses during mid-day trading. Later in the day, analysts are predicting that the US Existing Home Sales figure will show improvements in the American Real Estate sector. If true, the dollar could move up as a result.

Forex Market Trends

Daily Trend no no up up up up
Weekly Trend up down up down up up
Resistance 1.2885 1.5967 80.62 0.9480 1.0027 0.8184
1.2841 1.5911 80.15 0.9437 0.9981 0.8139
1.2009 1.5877 79.91 0.9410 0.9949 0.8112
Support 1.2754 1.5821 79.28 0.9365 0.9898 0.8067
1.2728 1.5786 78.99 0.9340 0.9866 0.8041
1.2678 1.5730 78.47 0.9297 0.9814 0.7995

Economic News

USD – Risk Aversion Boosts USD

Investors once again returned to safe-haven assets during European trading yesterday, resulting in gains for the US dollar against many of its main currency rivals. A pledge by world leaders over the weekend to help support the euro in the event that Greece is forced to exit the euro-zone did little to convince investors that the euro-zone debt crisis is anywhere close to being over. As a result, the EUR/USD, which had peaked at 1.2811 during overnight trading, tumbled over 80 pips throughout the day, eventually reaching as low as 1.2724.

Turning to today, dollar traders will want to pay attention to the US Existing Home Sales figure, scheduled to be released at 14:00 GMT. Analysts are predicting the figure to come in at 4.62M, which if true, would represent a significant increase over last month’s result and could lead to dollar gains against its safe-haven rival, the Japanese yen. That being said, should today’s news disappoint and come in below expectations, the dollar may give up some of yesterday’s gains against currencies like the euro and AUD.

EUR – Euro-Zone Uncertainties Lead to EUR Losses

After seeing gains against several of its main currency rivals during trading late last week, the euro resumed its bearish trend yesterday against its safe-haven currency rivals. Analysts attributed the downward correction to ongoing fears about the potential outcome of elections in Greece, scheduled for next month. In addition dropping more than 80 pips against the US dollar, the euro was also down approximately 65 pips against the Japanese yen. The EUR/JPY fell as low as 100.92 before staging a slight correction during the afternoon session and stabilizing around the 101.25 level.

Today, any announcements out of the euro-zone have the potential to generate volatility for the common currency. Conflicting solutions to the euro-zone debt crisis between France’s new President and the German government have led to investor worries about the prospects for economic recovery in the region. Any additional news today which indicates that euro-zone leaders are still failing to come to a unified position could result in the EUR extending yesterday’s losses further.

Gold – Gold Sees Mild Bearish Movement

Following last week’s significant bullish movement, gold once again turned downward during yesterday’s trading session as risk aversion returned to the marketplace. The precious metal fell well over $10 an ounce during the European session, dropping as low as $1584.57 before staging a slight upward correction.

Turning to today, traders will want to pay attention to euro-zone news which has the potential to impact the price of commodities and precious metals. Any risk aversion due to concerns about the upcoming elections in Greece and their potential impact on other countries in the euro-zone could cause gold to extend yesterday’s losses.

Crude Oil – Crude Oil Advances above $92

Upcoming talks between Iran and world leaders this week regarding that country’s disputed nuclear program resulted in mild supply side fears among investors, which brought the price of crude oil above the $92 a barrel level. Additionally, euro gains last week led to moderate risk taking in the marketplace, giving crude a slight boost. Overall the commodity was up close to $1 during European trading, peaking at $92.63.

Turning to today, crude traders will want to pay attention to any announcements out of the euro-zone which have the potential to generate significant market volatility. Any signs that the current crisis in Greece could spread to other euro-zone countries, in particular Spain, could result in oil reversing yesterday’s gains.

Technical News

The MACD/OsMA on the weekly chart has formed a bullish cross, indicating that this pair could see an upward correction in the coming days. This theory is supported by the Williams Percent Range on the same chart, which has dropped into oversold territory. Going long may be the wise choice for this pair.
Most long term technical indicators show this pair range-trading, meaning a definitive trend is difficult to determine at this time. Traders will want to keep an eye on the Relative Strength Index on the daily chart, as it is close to dropping into oversold territory. Should the indicator drop below the 30 line, it may be a sign of an impending upward correction.
The weekly chart’s Williams Percent Range has crossed over into oversold territory, indicating that this pair could see upward movement in the coming days. Additionally, the MACD/OsMA on the daily chart has formed a bullish cross. Opening long positions may be the wise choice for this pair.
The weekly chart’s MACD/OsMA has formed a bearish cross, indicating that a downward correction could occur in the near future. Furthermore, the same chart’s Williams Percent Range has drifted into overbought territory. Traders may want to open short positions ahead of possible downward movement.

The Wild Card

Dow Jones Industrials
The daily chart’s Williams Percent Range has dropped into oversold territory, indicating that upward movement could occur in the near future. Furthermore, the same chart’s Slow Stochastic has formed a bullish cross.
Forex traders may want to go long in their positions ahead of a possible upward breach.

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