Market Looks to US Retail Sales

The US dollars had a bearish trend against most of its main currency rivals before markets closed for the weekend on Friday, as concerns regarding Spanish debt continued to boost safe-haven currencies. Worries about Spain were also largely responsible for losses that both silver and gold took for the day.
This week, all eyes will be focused on the EU Economic Summit starting Thursday, as well as Friday’s Existing Home Sales report. With analysts predicting declines over last month’s home sales figure, the USD may have a hard time maintaining its recovery of recent losses in the coming days.

Forex Market Trends

Daily Trend down down up up down down
Weekly Trend down down no no up no
Resistance 1.2995 1.6110 79.35 0.9445 1.0305 0.8135
1.2975 1.6090 79.15 0.9425 1.0285 0.8115
1.2945 1.6060 78.85 0.9395 1.0255 0.8085
Support 1.2885 1.6000 78.25 0.9335 1.0195 0.8025
1.2855 1.5970 77.95 0.9305 1.0165 0.7995
1.2835 1.5950 77.75 0.9285 1.0145 0.7975

Economic News

USD – US Retail Sales Could Help Dollar Today

The US dollar was largely bearish against its main currency rivals on Friday, except right after the PPI release which briefly boosted trading. The USD/CAD gained more than 40 pips during afternoon trading as 0.0.9807 before experiencing a minor downward correction. The pair eventually closed out the week at 1.2950. Meanwhile, against the New Zealand Dollar, the greenback saw only small upward movement in the morning’s trading. The pair finished out the day at 0.8150.

Turning to this week, while investors will be eagerly awaiting Thursday’s Unemployment Claims and Friday’s all-important Existing Home Sales figure, traders will not want to forget that there are other potentially impacting news events scheduled for the coming days. Today’s US Core Retail Sales and Retail Sales are forecasted to show a decline in consumer spending from last month. If the forecast comes in better than expected, however, the dollar may make back some of Friday’s losses. Attention should also be given to a speech from the Federal Reserve Bank President today, Core CPI on Tuesday, and the Philly Fed Manufacturing Index on Thursday.

EUR – Spain and Greece continue to affect Euro Trends

The euro continued its upward trend against the dollar and yen during Friday morning trading as traders pondered when and whether the heavily indebted Spain would request a bailout for its finances. The euro then saw a bearish trend of more than 40 pips against the U.S. dollar and the Yen during Friday afternoon trading due to a better than expected U.S. PPI news release . Afterwards, the euro recovered for the rest of Friday afternoon trading to close 1.2950.

This week, euro traders will want to continue monitoring developments out of Spain and Greece. Any sign that Spain is getting closer to receiving a bailout package may boost the currency, and any new concerns over Greece’s economic status will likely have a downward effect on euro trading. In addition, Thursday’s EU Economic Summit and Spanish 10-year Bond Auction are likely to provide important clues regarding the current state of the euro-zone economic recovery. Positive signs could help the euro recover some of its losses in recent months.

Gold – Gold Falls Due to Risk Aversion

Risk aversion among investors due to uncertainties regarding Spain’s debt situation weighed down on the price of gold and silver on Friday. Overall, gold fell more than $21 an ounce to trade as low as $1751.93 during afternoon trading. A minor upward correction brought prices to 1753.70 before markets closed for the weekend.

This week, gold traders will want to pay attention to a batch of euro-zone and US news for clues regarding the appetite for risk among investors. Gold may recoup some of Friday’s losses if it appears that Spain is closer to requesting a bailout package. That being said, any better than expected news out of the US could lead to dollar gains which may further weigh down the price of gold.

Crude Oil – Crude Oil Prices Look to Major US New this Week

The price of oil continued to fall after Chinese economic indicators did little to raise hopes for a rebound in the world’s second-largest economy. After falling more than $1 a barrel during Friday’s trading, crude oil was able to stabilize before closing at $91.67. Crude oil traded as high as $92.57 and low as $91.14 during the day.

This week oil traders will want to monitor Friday’s U.S. Existing Home Sales figures. Additionally the Core Retail Sales, Retail Sales, and FOMC Meeting Minutes could all potentially impact the price of oil. Better than expected news may indicate that the demand for crude in the US will rise, which could boost prices.

Technical News

The EUR/USD cross has been experiencing much bullish behavior in the past few days; however, technical data supports a bearish move for today. The Williams Percent Range of the Weekly chart indicates that the pair floats in the overbought territory, leading to the conclusion that a downward correction is imminent. Going short with tight stops may turn out to pay off today.
Narrow range trading continues as the pair did not make a significant move in either direction and is currently trading around the 1.6040 level. The weekly chart’s Slow Stochastic is showing a bearish cross, suggesting that a downward correction might take place in the nearest time frame. When the downwards breach occurs, going short with tight stops appears to be preferable strategy.
The pair has been range-trading for a while now with no specific direction. The daily chart’s Slow Stochastic shows mixed signals. The weekly charts do not provide a clear direction as well. Waiting for a clearer sign on the hourlies chart might be a good strategy today.
The daily chart is showing mixed signals with its RSI fluctuating in neutral territory. However, the weekly chart’s Williams Percent Range is already floating in oversold territory indicating that a bullish correction might take place in the near future. When the upwards breach occurs, going long with tight stops appears to be preferable strategy.

The Wild Card

This pair’s sustained upward movement has finally pushed its price into the over-bought territory on the daily chart’s Williams Percent Range. Not only that, but there actually appears to be a bearish cross on the Slow Stochastic – indicative of an imminent downward correction. Forex traders have the opportunity to wait for the downward breach on the hourlies and go short in order to ride out the impending wave.

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