The US dollar fell to a fresh 14-month low against the euro on Friday, following a disappointing Non-Farm Payrolls figure which reaffirmed speculations that the Fed will leave in place record low interest rates for the foreseeable future. This week, news out of the euro-zone is forecasted to have the biggest impact on the marketplace. Traders will want to pay attention to today’s Spanish Unemployment Change, the German Factory Orders figure on Wednesday, and Thursday’s Minimum Bid Rate and ECB Press Conference. Any disappointing data may cause the euro to reverse its recent bullish trend.
Forex Market Trends
USD – Dollar Rebounds after US Manufacturing Data
While a worse than expected US Non-Farm Payrolls report resulted in the US dollar turning bearish during mid-day trading on Friday, the greenback was able to rebound later in the day following a positive ISM Manufacturing PMI. The USD/CHF, which traded as low as 0.9021 during the first half of the day, gained more than 60 pips during the afternoon session to eventually close out the week at 0.9076. The USD/JPY was able to gain more than 100 pips during US trading, eventually reaching as high as 92.95, before dropping back to 92.77.
This week, dollar traders will want to pay attention to a number of potentially significant US economic indicators. Tuesday’s ISM Non-Manufacturing PMI, Thursday’s Unemployment Claims figure, and Friday’s Trade Balance can all give the dollar an additional boost if they show any kind of improvements in the US economy. Conversely, if the US news signals that the US economic recovery is slowing down, the dollar could take losses against its main currency rivals.
EUR – Euro Extends Gains vs. Safe-Haven Rivals
The euro saw gains against both the safe-haven US dollar and Japanese yen on Friday, following a worse than expected Non-Farm Payrolls figure which reaffirmed speculations that the Fed will leave in place record US low interest rates for the foreseeable future. The EUR/USD advanced more than 100 pips during the mid-day session to trade as high as 1.3710, a new 14-month high. A downward correction later in the day resulted in the pair closing out the week at 1.3642. The EUR/JPY gained close to 200 pips toward the end of the European session before peaking at 126.96
Euro traders will want to pay attention to several economic indicators over the course of this week. Perhaps the most significant piece of news will be Thursday’s Minimum Bid Rate and ECB Press Conference. While the European Central Bank is not expected to adjust interest rates, any indication that the situation in the euro-zone is improving may help the euro extend some of its recent gains. Additionally, today’s Spanish Unemployment Change and Wednesday’s German Factory Orders figures could give the euro a short-term boost if they come in above their forecasted levels.
Gold – NFP Report Leads to Temporary Gains for Gold
Gold prices spiked more than $15 an ounce to trade as high as $1681.86 on Friday, following a worse than expected US Non-Farm Payrolls report. That being said, the gains were only temporary, and by the afternoon session the precious metal had dropped back to $1670 and eventually finished out the week at $1666.93.
This week, gold traders will want to pay attention to the US ISM Non-Manufacturing PMI and Trade Balance figures. If either of the indicators comes in below their forecasted levels, the dollar could turn bearish, which would likely lead to an increase in gold prices.
Crude Oil – US Manufacturing Data Boosts Oil Prices
While the price of crude oil fell close to $1 a barrel following the US Non-Farm Payrolls report on Friday, better than expected US manufacturing data led to a bullish recovery later in the day. The commodity, which fell as low as $96.50 during mid-day trading, peaked at $98.10 during the afternoon session before closing out the week at $97.56.
This week, oil traders will want to pay attention to the US ISM Non-Manufacturing PMI, EU Minimum Bid Rate and US Trade Balance figure. If any of the data indicates growth in the global economy, investor risk taking is likely to boost oil prices.
The weekly chart’s Slow Stochastic is close to forming a bearish cross, indicating that a downward correction could occur in the near future. Additionally, the same chart’s Relative Strength Index has crossed into overbought territory. Opening long positions may be the smart choice for this pair.
The Williams Percent Range on the weekly chart has fallen into oversold territory, indicating that an upward correction could occur in the near future. Furthermore, the MACD/OsMA on the daily chart appears close to forming a bullish cross. Traders may want to open long positions.
The Relative Strength Index on the weekly chart has cross into overbought territory, indicating that a downward correction could occur in the coming days. This theory is supported by the Slow Stochastic on the same chart, which has formed a bearish cross. Opening short positions may be the smart choice for this pair.
While the weekly chart’s Williams Percent Range has crossed over into oversold territory, most other long-term technical indicators place this pair in neutral territory. Traders may want to take a wait and see approach, as a clearer picture is likely to present itself in the near future.
The Wild Card
The Williams Percent Range on the daily chart has crossed over into overbought territory, indicating that a downward correction could occur in the near future. This theory is supported by the Slow Stochastic on the same chart, which has formed a bearish cross. Opening short positions may be the best choice for forex traders today.
Written by Forexyard.com