EUR/USD Falls to 21-Month Low

The EUR/USD fell as low as 1.2614 yesterday, a 21-month low, after investors grew increasingly concerned regarding Greece’s fate in the euro-zone and shifted their funds to safe-haven assets. The currency pair staged a mild upward correction later in the day, eventually stabilizing around the 1.2655 level. Turning to today, euro traders will want to pay attention to several potentially significant news events. Specifically, the German Manufacturing PMI and Ifo Business Climate may help the euro recoup some of yesterday’s losses if they come in above expectations.

Forex Market Trends

Daily Trend down down no up up no
Weekly Trend down down up up down down
Resistance 1.2699 1.5807 80.43 0.9613 0.9901 0.8102
1.2664 1.5760 79.98 0.9661 0.9849 0.8069
1.2636 1.5729 79.69 0.9628 0.9828 0.8042
Support 1.2578 1.5683 79.23 0.9590 0.9773 0.8006
1.2545 1.5649 78.94 0.9561 0.9740 0.7985
1.2501 1.5600 78.50 0.9512 0.9699 0.7948

Economic News

USD – Dollar Sees Significant Gains amid Risk Aversion

The US dollar moved up against several of its main currency rivals yesterday, as ongoing fears regarding Greece’s future in the euro-zone have led to risk aversion in the marketplace. Against the euro, the dollar gained over 60 pips, eventually hitting a 21-month high. The USD/CHF advanced some 50 pips during the European session, eventually peaking at 0.9518, a four-month high. That being said, the news was not all positive for the greenback. Against its safe-haven rival the JPY, the USD fell close to 60 pips, eventually reaching 79.32 during mid-day trading.

Today, dollar traders will want to pay attention to several US indicators which may generate market volatility. At 12:30 GMT, the Core Durable Goods Orders and Unemployment Claims figures are set to be released. Both are forecasted to show growth in the US economy, which if true, may help the dollar against currencies like the yen, GBP and euro. Traders will also want to pay attention to any news out of the euro-zone which could impact the dollar. Specifically, any negative announcements out of Greece are likely to cause safe-haven currencies like the dollar to extend their bullish trends.

EUR – Greece Worries Send Euro to Fresh Lows

The inability of euro-zone leaders to come up with fresh ideas to combat the debt crisis in the region caused higher-yielding assets like the euro to tumble vs. the safe-haven currencies during yesterday’s trading session. Differences in opinion between France’s anti-austerity new government and German officials have led to serious concerns among investors regarding the future prospects for the euro-zone. In addition to falling to a 21-month low against the US dollar, the EUR/JPY dropped over 100 pips over the course of the day, eventually reaching as low as 100.15.

Turning to today, euro-traders will want to pay attention to several indicators that may generate market volatility. The German Flash Manufacturing PMI and Ifo Business Climate, set to be released at 7:30 and 8:00 GMT, may help the euro during the morning trading session if they come in above expectations. At the same time, traders should be warned that the overall trend for the euro is still bearish. Any positive euro-zone news may be overshadowed by the political and economic crisis in Greece, which could limit any gains.

Gold – Gold Tumbles as Investors Move to Safe-Haven’s

Gains by the safe-haven US dollar yesterday resulted in gold tumbling over $20 an ounce during mid-day trading. Typically, a bullish dollar negatively impacts commodities and precious metals, as it makes them more expensive for buyers outside of the US. The price of gold dropped below $1540.00 by the afternoon session.

Turning to today, gold traders will want to pay attention to US news set to be released toward the end of European trading. Should any of the news result in additional dollar gains, gold may fall during the afternoon session.

Crude Oil – Oil Drops to 7-Month low

The price of crude oil fell as low as $90.68 a barrel during European trading yesterday, a seven-month low. Oil, along with most other commodities, has turned bearish due to fears that Greece may have to exit the euro-zone due to its unwillingness to commit to austerity measures. In addition, record high stockpiles of crude oil in the US have led to an additional drop in prices.

Turning to today, the direction oil takes will once again likely be determined by euro-zone news. Any additional negative developments could result in the commodity extending yesterday’s losses. At the same time, should any of the US news set to be released come in above expectations, it may be taken as a sign of increased demand which could lead to a modest increase in the price of crude.

Technical News

The Relative Strength Index on the daily chart indicates that this pair is in oversold territory, meaning an upward correction could occur in the near future. This theory is supported by the MACD/OsMA on the weekly chart, which has formed a bullish cross. Going long may be the wise choice.
The weekly chart’s Williams Percent Range has dropped below the -80 level, indicating that an upward reversal could take place. Furthermore, the Slow Stochastic on the daily chart has formed a bullish cross. Traders may want to go long in their positions.
Long term technical indicators for this pair are providing conflicting signals at this time. On the one hand, the weekly chart’s MACD/OsMA has formed a bearish cross. At the same time, the Williams Percent Range on the same chart is in oversold territory. Taking a wait and see approach may be the wise choice for this pair.
The weekly chart’s MACD/OsMA has formed a bearish cross, indicating that this pair could see downward movement in the near future. This theory is supported by the Willaims Percent Range on the same chart, which has crossed above the -20 line. Opening short positions may be the wise choice for this pair.

The Wild Card

The daily chart’s Williams Percent Range is currently in overbought territory, indicating that downward movement could occur in the near future. This theory is supported by the Relative Strength Index on the same chart, which is currently at the 70 level. Forex traders may want to open short positions ahead of a possible downward breach.

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