Increased confidence in Germany, Spanish Bailout Lift Euro

The euro made bullish gains yesterday morning against the dollar and yen, as investors increased their confidence regarding Spain asking for a bailout and confidence in the German economy. Today, the main piece of economic news is likely to be the U.S. Building Permits data set to be released at 12:30 GMT. Analysts are forecasting that the indicator will come in at 0.81M, which if true, would be an improvement over last month’s 0.80M. Any better than expected news might result in the euro falling against the USD.

Forex Market Trends

Daily Trend up up down down up up
Weekly Trend up up up down up up
Resistance 1.3190 1.6215 79.50 0.9310 1.0395 0.8200
1.3170 1.6195 79.30 0.9290 1.0375 0.8180
1.3140 1.6165 79.00 0.9260 1.0345 0.8150
Support 1.3080 1.6105 78.45 0.9200 1.0285 0.8090
1.3050 1.6075 78.15 0.9170 1.0255 0.8060
1.3030 1.6055 77.95 0.9150 1.0235 0.8040

Economic News

USD – Building Permits Data Could Boost Dollar

The U.S. dollar lost ground against its rival currencies on Tuesday in morning trading as risk appetite dominated in the currency markets. Tuesday’s USD/CAN started the mornings trading with slight downward trend before making a bullish correction of more than 75 pips. The USD/CHF had a bearish morning session from a high of 0.9332 to a low of 0.9258 before taking a bullish correction in afternoon trading.

Today, dollar traders will want to keep an eye on the US Building Permits, scheduled to be released at 12:30 GMT. With analysts predicting today’s news to come in at 0.81M, if the result comes higher than expected, the USD may be able to recoup some of its recent losses against the euro. Also important new releases today are the U.S. Housing Starts and Crude Oil Inventories to be released at 12:30 GMT and 14:30 GMT, respectively,

EUR – Euro Sees Gains on Spain and German News

The euro rose against the dollar on Tuesday, helped by persistent talks that Spain might soon ask for a bailout and tentative signs of improving confidence in the German economy. EUR/USD during morning trading session had a low of 1.29521 and steadily rose to 1.30594 before taking a downward correction due to positive U.S. news releases during noon trading. EUR/JPY rose during yesterday morning’s trading to reach a high of 103.064 before making a slight downward correction for afternoon trading, and then trended upward again.

Today, investors should take heed of the US Housing Starts and Building Permits, set to be released at 12:30 GMT. Euro traders should note any news that is worse than expected may result in additional risk taking among investors, which could boost higher-yielding assets like the euro. At the same time, if the news disappoints, the euro could reverse some of yesterday’s gains against its safe-haven currency rivals.

GBP – MPC Meeting Minutes On Tap

Yesterday morning, the British pound sterling saw upward trading of 70 pips against the dollar before several positive U.S news releases at 12:30 GMT. Conversely, due to Spanish bailout and German economic recovery news, the euro rose against the sterling during morning trading for a low of 0.8060 to reach a high of 0.8101 before making a downward correction for afternoon trading.

Today, the main pieces of sterling news are likely to be the MPC Meeting Minutes and the Claimant Count Change releases at 8:30 GMT, and later at 9:15 BOE Deputy Governor Paul Tucker speaking at the British Bankers Association. This speech might give clues to future interest rate and monetary policy. If the news events signal economic growth in the UK, either through upbeat comments from Tucker or a decrease in people claiming unemployment-related benefits, the British pound sterling could see gains as a result.

Tomorrow, traders will not want to forget to pay attention to the GBP Retail Sales figure to get a better gauge of the how the UK retail sector is performing.

Crude Oil – Crude Oil Impacted by Range Trading

Despite modest risk taking in the marketplace on Tuesday, crude oil failed to make any significant gains due to range trading. After the commodity advanced slightly less than $0.50 a barrel during the morning trading session, it traded as high as $92.29. Then at the start of the afternoon trading, oil price saw a slight downward correction.

Today, commodities traders will want to note the release of U.S. economic news, including the Crude Oil Inventories figure, set to be announced at 14:30 GMT. If the U.S. inventories data comes in higher than expected, the price of oil might trend downward during the afternoon session.

Technical News

The EUR/USD cross has experienced a bullish trend for the past week. However, it seems that this trend may be coming to an end. For example, the weekly chart’s Stochastic Slow signals that a bearish reversal is imminent. A downward trend today is also supported by Williams Percent Range. Going short with tight stops may turn out to pay off today.
The cross has experienced much bullishness in the last 2 days, and currently stands at the 1.6125 level. There is much evidence in the chart’s oscillators that supports a possible bearish correction today. This is supported by weekly chart’s Slow Stochastic. Going short with tight stops may turn out to bring big profits today.
The USD/CHF cross has experienced a bearish trend for the past 2 weeks. However, it seems that this trend may be coming to an end. The Williams Percent Range of the Weekly chart shows the pair floating in the over-sold territory, indicating that an upward correction will happen anytime soon. Going long with tight stops might be a wise choice.
The pair has been range-trading for a while now, with no specific direction. The Daily chart’s Slow Stochastic providing us with mixed signals. The 4 hour 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 Wild Card

The silver prices are once again dropping, and it is currently traded around $32.90 per ounce. However, the daily chart’s RSI is floating in an oversold territory suggesting that a recent downwards trend is loosing steam and a bullish correction is impending. This might be a good opportunity for forex traders to enter the trend at a very early stage.

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