The euro remained bearish throughout the day yesterday, as ongoing concerns regarding the debt situations in Greece and Spain weighed down on investor confidence in the euro-zone economic recovery. Today, the main piece of economic news is likely to be the US New Home Sales figure, set to be released at 14:00 GMT. Analysts are forecasting that the indicator will come in at 381K, which if true, would be an improvement over last month’s 372K. Any better than expected news could result in the euro falling further against the USD.
Forex Market Trends
USD – Home Sales Data Could Help Boost Dollar
The US dollar saw gains against most higher-yielding currencies yesterday, as investor confidence in the euro-zone economic recovery declined which boosted the safe-haven USD. That being said, against the safe-haven yen, the dollar remained bearish. After reaching as high as 0.9383 during early morning trading, the USD/CHF saw a slight downward correction and spent most of the European session trading around the 0.9370 level. The USD/JPY spent most of the day trading around the 77.75 level, slightly above a recent ten-day low.
Today, dollar traders will want to keep an eye on the US New Home Sales figure, scheduled to be released at 14:00 GMT. A better than expected home sales figure in August gave the greenback a boost against several of its main currency rivals. With analysts predicting today’s news to come in at 381K, higher than last month’s, the USD may be able to recoup some of its recent losses against the yen. Tomorrow, traders will not want to forget to pay attention to the US Pending Home Sales figure to get a better gauge of the how the US retail sector is performing.
EUR – Debt Worries Lead to Further Euro Losses
The euro took additional losses against its main currency rivals yesterday, as concerns regarding Greece’s ability to meet the commitments of its recent bailout agreement and speculations that Spain will soon seek a bailout of its own weighed down on risk appetite. The EUR/USD reversed modest gains it made during Asian trading, and spent most of the day trading around the 1.2900 level. Against the Japanese yen, the common-currency also saw downward movement following a brief spike during overnight trading. The EUR/JPY spent most of the day trading around 100.30.
Today, the main piece of European news is likely to be a German ten-year bond auction. While Germany is the euro-zone’s strongest economy, and German bonds are often thought of as one of the safest investments in the EU, recent data suggests that the country is beginning to feel the effects of the debt-crisis. Should there be any signs of a decrease in demand for German debt, the euro could extend its recent bearish trend.
Gold – Gold Fails to Recoup Earlier Losses
Gold spent most of the day yesterday range trading, as renewed fears regarding the debt situations in Greece and Spain, combined with disappointing German news earlier in the week, resulted in risk aversion in the marketplace. The precious metal spent most of the day trading around the $1765 an ounce level, well below the 6 ½ month high of $1787 it hit last week.
Today, gold traders will want to continue monitoring developments out of the euro-zone, particularly with regards to the situation in Spain. Most analysts agree that Spain will soon have to request a bailout package from the ECB. When it does, investors may shift their funds to riskier assets, which could help gold recoup some of this week’s losses.
Crude Oil – US Inventories Figure Set to Impact Oil
After seeing a modest boost during overnight trading yesterday, crude oil was able to largely maintain its gains throughout the European session. The commodity spent most of the day trading around the $92.40 a barrel level, well above its low of $91.05 from earlier in the week.
Today, oil traders will want to pay close attention to the US Crude Oil Inventories figure, set to be released at 14:30 GMT. The indicator has come in significantly higher than expected for the last two weeks, which was taken as a sign that demand in the US has gone down and resulted in the price of oil falling. If today’s news once again comes in above the forecasted level, crude may give back its recent gains.
A bearish cross on the weekly chart’s Slow Stochastic indicates that this pair may see a downward correction in the near future. Additionally, the Williams Percent Range on the same chart has crossed over into overbought territory. Opening short positions may be the wise choice for this pair.
The daily chart’s Relative Strength Index has crossed into the overbought zone, signaling a possible downward correction in the near future. This theory is supported by the weekly chart’s Williams Percent Range, which is currently above the -20 level. Traders may want to open short positions for this pair.
While a bearish cross has formed on the daily chart’s MACD/OsMA, most other technical indicators place this pair in neutral territory. Traders may want to take a wait and see approach for this pair, as a clearer picture is likely to present itself in the near future.
The Bollinger Bands on the weekly chart are narrowing, indicating that this pair could see a price shift in the near future. Furthermore, the Williams Percent Range on the same chart has crossed into oversold territory, signaling that the price shift could be upward. Opening long positions may be the wise choice for this pair.
The Wild Card
The daily chart’s MACD/OsMA has formed a bearish cross, signaling that downward movement could occur in the near future. Furthermore, the Williams Percent Range on the same chart has crossed into overbought territory. This may be a good time for forex traders to open short positions ahead of a downward correction.
Written by Forexyard.com