Spain and Greece Concerns Continue to Affect Euro Zone Trading

News out of Europe affected yesterday’s trading as most major pairs turned bearish due to concerns about Spain and Greece. A speech from European Central Bank President Draghi during morning trading kept the major pairs from huge declines, though some currencies and commodities recovered better than others. Today, investors will want to monitor Industrial Production numbers out of the euro zone, which can indicate trends for currencies and commodities. For U.S. dollar, traders will want to watch the bond auction and beige book releases.

Forex Market Trends

Daily Trend down down down up down down
Weekly Trend down down down up up down
Resistance 1.2971 1.6099 79.20 0.9517 1.0334 0.8136
1.2920 1.6053 78.75 0.9472 1.0279 0.8092
1.2888 1.6025 78.40 0.9440 1.0245 0.8065
Support 1.2836 1.5980 77.93 0.9395 1.0189 0.8021
1.2807 1.5951 77.61 0.9363 1.0155 0.7994
1.2755 1.5905 77.12 0.9316 1.0101 0.7951

Economic News

USD – U.S. Indictors for Interests Released Today

After posting modest gains during morning trading yesterday, the AUD/USD turned bearish during the afternoon session. Also, the GBP came under increased downside pressure against the greenback as risk aversion among investors occurred following ECB President Draghi’s speech before the European Parliament. The GBP/USD fell some 40 pips before finding support at 1.6000 and bouncing back to the 1.6030 level. By the end of European trading, the pair was back at 1.6010.

Turning to today, investors will want to keep an eye on the US 10-yr Bond Auction set to be released at 17:00 GMT, followed by the Beige Book analysis being released by the Federal Reserve today at 18:00 GMT. These both are good indicators of U.S. future interest rates, and tend to generate volatility in the marketplace.

EUR – Euro falls on Greek and Spanish concerns

The euro fell Tuesday, pulling away from its recent highs as uncertainty about Spain’s bailout and new concerns about Greece weighed on investors. The EUR/USD and EUR/JPY fell more than 80 pips during yesterday morning’s trading. European Central Bank President Mario Draghi’s reiteration that the ECB’s financial support for the trouble euro zone states was unlimited helped limit the losses.

Today investors will want to watch the French and Italian Industrial Production numbers being released at 6:45 and 8:00 GMT, respectively. These percentages are a leading indicator of the economic health. If these numbers are higher than expected, the euro may make back some of the gains it lost in yesterday’s trading.

Gold – Gold sees a drop due to EU news

The price of gold fell by more than $7.50 an ounce yesterday, as news out of the euro-zone continued to generate risk aversion in the marketplace. Despite hitting an 11-month high last week, gold has taken fairly significant losses in recent days due to concerns regarding the pace of the global economic recovery. By the end of the European trading, prices were steady at the $1766 level.

Today, investors will want to watch for any announcements out of the euro zone. Positive news may generate risk taking among investors, which could lead to an increase in demand for gold. At the same time, traders will want to note that any disappointing announcements could result in additional losses for gold.

Crude Oil – Crude Oil Recoups Losses in Afternoon Trading

The price of crude oil took minor losses during early morning trading yesterday, as euro-zone news led to risk aversion among investors. After falling by almost $1 a barrel to trade as low as $89.26, the commodity was able to bounce back to the $90.70 level by the end of the European session.

Today, investors will want to pay attention to US news. Any better than expected data could lead to speculations that demand in the US will increase, which could help oil extend yesterday’s upward movement.

Technical News

The weekly chart’s Slow Stochastic appears close to forming a bearish cross, signaling the possibility of a downward correction in the coming days. In addition, the Williams Percent Range on the same chart has crossed into overbought territory. This may be a good time for traders to open short positions.
While the Williams Percent Range on the daily chart has dropped into oversold territory, indicating that an upward correction could occur shortly, most other long term technical indicators show this pair range trading. 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.
Most long term technical indicators, including the daily chart’s Relative Strength Index which remains steady at the 60 level, show this pair range trading. With a defined trend difficult to determine at this time, traders may want to take a wait and see approach for this pair.
The daily chart’s Relative Strength Index is approaching oversold territory, while the same chart’s MACD/OsMA appears close to forming a bullish cross. Traders will want to keep an eye on both of these indicators, as they may point to a possible upward correction in the near future.

The Wild Card

The Relative Strength Index on the daily chart is approaching the overbought zone, indicating that downward movement could occur in the near future. Furthermore, the Slow Stochastic on the same chart has formed a bearish cross. This may be a good time for forex traders to open short positions ahead of a possible downward breach.

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