US, Euro-Zone News Set to Generate Volatility Today

A lack of significant international news yesterday, combined with concerns regarding a hurricane set to hit the United States resulted in low volatility in the marketplace. Crude oil reversed earlier gains during the second half of the day, as the threat posed by Hurricane Sandy to US refining capabilities led to supply side fears among investors. Today, traders can anticipate market volatility following an Italian bond auction and US CB Consumer Confidence figure at 14:00 GMT. Any positive data could boost risk taking, which may help the euro recoup some of yesterday’s losses.

Forex Market Trends

Daily Trend up up down down up up
Weekly Trend no down down down up up
Resistance 1.3015 1.6143 80.29 0.9447 1.0468 0.8139
1.2981 1.6110 79.99 0.9411 1.0423 0.8103
1.2949 1.6078 79.80 0.9383 1.0391 0.8082
Support 1.2890 1.6015 79.15 0.9320 1.0329 0.8021
1.2863 1.5983 78.93 0.9293 1.0301 0.7996
1.2818 1.5941 78.60 0.9248 1.0263 0.7954

Economic News

USD – Consumer Confidence Data Set to Impact USD

The US dollar saw a slow trading day to start off the week yesterday, as a lack of significant news combined with the closure of US markets due to Hurricane Sandy created a low volatility situation in the marketplace. After advancing around 25 pips during early morning trading, the USD/CHF staged a downward correction, eventually erasing all of its earlier gains. By the end of European trading, the pair was at 0.9355. Against the Japanese yen, the dollar fell some 20 pips to trade as low as 79.51 during the morning session, before bouncing back to the 79.75 level by the end of the day.

Today, dollar traders can anticipate heavier volatility in the marketplace, following the release of the US CB Consumer Confidence report at 14:00 GMT. Analysts are forecasting that consumer confidence in the US increased to 72.4 from 70.3 last month. If true, it would be yet another sign that the American economic recovery is progressing, albeit at a slow rate. Any better than expected data could result in the USD advancing against its main currency rivals, including the CHF and JPY during afternoon trading.

EUR – Euro May See Volatility Following Italian Bond Auction

The euro was able to make minor gains against several of its main currency rivals yesterday, although ongoing concerns regarding Spanish and Greek debt limited the currency’s bullish trend. Against the British pound, the common-currency advanced just under 30 pips for the day, eventually trading as high as 0.8049. After falling some 40 pips during the first half of the day, the EUR/USD was able to bounce back during mid-day trading and spent most of the afternoon session around the 1.2915 level.

Today, euro traders will want to pay attention to several key news events. First up is a speech from ECB President Draghi, scheduled to take place at 8:00 GMT. Any positive statements from the ECB President with regards to the ongoing debt crisis in the EU could boost the euro during morning trading. Next, an Italian 10-year bond auction could also benefit the common-currency if demand for Italian debt comes in higher than expected. Later in the day, a US consumer confidence figure could also impact the euro, with any better than expected news likely to result in risk taking among investors.

Gold – Gold Takes Minor Losses to Begin Week

A drop in global stock prices resulted in gold taking relatively minor losses to start off the week yesterday. Still, the precious metal was able to remain well above the psychologically significant $1700 level throughout the day. Gold fell just over $7 an ounce during European trading before stabilizing at the $1708 level.

Today, gold traders will want to pay attention to a batch of euro-zone and US news. Any better than expected data could lead to an increase in risk taking among investors, which may boost the price of gold over the course of the day.

Crude Oil – Oil Remains Low amid Fears of Hurricanes Impact

After seeing slight gains during the first part of the day yesterday, the price of oil once again turned bearish amid fears about Hurricane Sandy’s potential impact on US refining capabilities. Crude advanced as high as $86.31, up close to $1 a barrel, before falling once again during the afternoon session and stabilizing at the $85.30 level.

Today, crude traders will want to pay close attention to the impact the hurricane has on oil demand in the US, the world’s leading oil consuming country. Furthermore, news out of the US and euro-zone may have an impact on risk sentiment among investors. Worse than expected data could result in the price of oil falling further throughout the day.

Technical News

The Williams Percent Range on the weekly chart has crossed into overbought territory, indicating that a downward correction could take place in the coming days. This theory is supported by the Slow Stochastic on the same chart, which has formed a bearish cross. Traders may want to open short positions for this pair.
Most long-term technical indicators place this pair in neutral territory, making a definitive trend difficult to predict at this time. Traders may want to take a wait and see approach, as a clearer picture is likely to present itself in the near future.
The Relative Strength Index on the daily chart is approaching the overbought zone, meaning that this pair could see a downward correction in the near future. Furthermore, the MACD/OsMA on the same chart appears close to forming a bearish cross. Traders will want to keep an eye on these indicators, as they may signal an impending downward correction.
The Slow Stochastic on the weekly chart has formed a bullish cross, signaling that this pair could see an upward correction in the coming days. Additionally, the Williams Percent Range on the same chart is currently in oversold territory. Opening long positions may be the smart choice for this pair.

The Wild Card

Crude Oil
The daily chart’s Relative Strength Index has fallen into oversold territory, indicating that an upward correction could occur in the near future. Furthermore, the same chart’s Slow Stochastic has formed a bullish cross. Forex traders may want to open long positions ahead of possible upward movement today.

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