The EUR rose against the US Dollar and came off 7-week lows against the Japanese Yen on Tuesday, helped by solid results of Irish and Spanish bond auctions which alleviated concerns about the heavily indebted Euro-Zone countries. The EUR rose 0.2% against the yen to 109.95 after an early fall as low as 109.10.
Economic News
USD – Dollar Trades Lower Against the EUR
The dollar fell against the EUR on Tuesday, as prospects of more weak economic data from the United States added to worries about a global slowdown and capped gains in stock markets. European shares followed most Asian stock markets slightly higher, although analysts said gains could prove to be fleeting given weak sentiment.
The major economic event that came out of the U.S yesterday was the Building Permits data release. Building permits, a leading indicator of housing construction, fell 3.1% to a seasonally adjusted annual rate of 565,000. This is the lowest level of permits since May 2009, underscoring the hazards to an economic recovery even as businesses appeared to be stepping up investment.
Another leading indicator released yesterday was U.S. Producer Price Index. This number handedly beat last month result but failed to provide strength to the Dollar as investors may be waiting for key data due to be released later this week to implement their trading strategies.
As for today, the calendar is lacking any major economic data releases for today’s trading. As such, traders will want to follow the movements of the major equity indices as the dollar has recently been trading in an inverse relationship to equities. Strength in stocks could propel the EUR/USD to its next resistance line which rests at 1.3000.
EUR – EUR Gains on Spanish and Irish Debt Auctions
The EUR rose against most of its major currency counterparts on Tuesday as solid results of Irish and Spanish bond auctions alleviated concerns about the heavily indebted Euro-Zone countries. By yesterday’s close, the EUR rose against the USD, pushing the oft-traded currency pair to 1.2890, and rebounded from a seven-week low against the yen and closed at around 109.95.
But the EUR struggled to hold above $1.29 on uneasiness about the economic outlook, with a key German survey sparking concerns about whether Europe’s largest economy can sustain a solid recovery. The German ZEW institute’s measure of investor and analyst sentiment dropped well below forecasts, though this was partly offset by an unexpectedly sharp jump in the current conditions index.
The single currency, which slid below $1.19 in June on Euro-Zone debt trouble, has since risen by more than 8% after smooth government debt auctions in Greece, Portugal, Spain and Ireland eased concerns.
JPY – Yen Sees Mixed Results vs. Majors
The Yen completed yesterday’s trading session with mixed results versus the other major currencies. The JPY was broadly unchanged versus the CHF yesterday and closed its trading session at around the 81.95. The yen did see bullishness as well as it gained over 50 pips against the GBP and closed at 133.30.
Some of the pressure came against the yen, as talk intensified that the Japanese government might put pressure on the Bank of Japan to loosen monetary stance even further in an effort to stop the yen from rising any more. The yen rose to a 15-year high this month against the U.S. currency, threatening to damage exports and derail Japan’s fragile economic recovery, with GDP growth slowing to a crawl at 0.1% in the April-June period.
Crude Oil – Crude Oil Rises Above $76 a Barrel
Oil snapped a five-day losing streak to rebound above $76 a barrel on Tuesday as firmer equity markets and a weaker dollar outweighed concerns about the pace of global economic recovery.
Oil and other commodities denominated in dollars for global trading tend to rise when the U.S. currency falls as they become cheaper for holders of other currencies. A move away from dollar-based pricing of the world’s leading commodity could further weaken the greenback.
As for today, traders should pay attention to the U.S Crude Oil Inventories report scheduled, as it tends to have a large impact on Crude Oil’s prices recently, especially for the short-term.
Technical News
EUR/USD
After yesterday’s rally the pair seems to have settled in to a range and is comfortably trading around the $1.2850 level. It seems, however, that there is some room for an upward trend today as a breach of the lower Bollinger Band is apparent on the hourly chart and with the RSI for the pair floating near the oversold territory on the daily chart. Going long with tight stops may be advised for today.
GBP/USD
The pair may be seeing some upward correction today as the RSI for the pair is floating in the oversold territory on the 2 hour and daily charts and a bullish cross is evident on the 4 hour and daily charts’ Slow Stochastic. Furthermore, the MACD for the pair is at the lower border on the hourly and 8 hour charts. Going long for today may be advised.
USD/JPY
The pair seems to be range trading between 85.20 and 85.60 with most indicators floating in neutral territory. Traders may be advised to wait on a clearer signal for the pair for today.
USD/CHF
The pair is currently range trading with most indicators floating in neutral territory while others show some mixed signals. A bearish cross is evident on the 4 hour chart’s Slow Stochastic while the RSI for the pair is floating near the oversold territory on the 4 hour and 8 hour charts. Waiting on a clearer direction for the pair may be advised for today.
The Wild Card
GBP/CAD
The RSI for the pair is floating in the oversold territory on the 2 hour and 8 hour charts while a bullish cross is evident on the 4 hour chart’s Slow Stochastic. Furthermore, a breach of the lower Bollinger Band is evident on the 8 hour chart. Forex traders may be advised to go long for the day.
Written by Forexyard.com