Source: ForexYard
The euro took losses against its main currency rivals throughout yesterday’s trading session, as concerns regarding the current state the EU economic recovery persisted following a Spanish credit rating downgrade earlier in the week. Today, traders will want to note a batch of economic news out of both the euro-zone and US. Both the German Ifo Business Climate and a speech from ECB President Draghi, scheduled for 8:00 and 14:00 GMT respectively, could lead to additional euro volatility during mid-day trading. In addition, attention should be given to the US New Home Sales figure at 14:00, followed by the FOMC Statement at 18:15.
Economic News
USD – New Home Sales Report Could Lead to Dollar Gains
Risk aversion, largely due to fresh euro-zone worries among investors, helped keep the US dollar bullish during European trading yesterday. In addition, expectations that the Bank of Japan will soon unveil a new round of monetary easing helped keep the greenback within reach of a recent three-month high against the Japanese yen.
The USD/JPY spent most of the day around the 79.85 level, just below Monday’s high of 80.02. Against the Swiss franc, the dollar was able to advance more than 60 pips to trade as high as 0.9339 during the mid-day session.
Today, dollar traders will want to pay particularly close attention to the US New Home Sales figure, set to be released at 14:00 GMT. Analysts are forecasting the indicator to come in at 386K, well above last month’s 373K. Any better than expected news could help the USD extend yesterday’s gains going into the second half of the week.
EUR – Euro Tumbles Following Fresh Worries Regarding Spain
The euro fell against most of its main currency rivals throughout the day yesterday, following the credit rating downgrade of five of Spain’s regions earlier in the week. The EUR/USD fell more than 100 pips over the course of the day, eventually trading as low as 1.2955 before bouncing back to the 1.2970 level toward the end of the day. Against the Japanese yen, the common currency came off a recent 5 ½ month high to trade as low as 103.42, down 95 pips for the day.
Turning to today, a batch of euro-zone news has the potential to create additional volatility for the euro. The German Ifo Business Climate, set to be released at 8:00 GMT, is considered a leading indicator of economic health in Germany, the euro-zone’s biggest economy. Any worse than expected news could put additional pressure on the euro during morning trading. Later in the day, ECB President Draghi is scheduled to speak at 14:00 GMT. If his speech fails to boost confidence in the euro-zone economic recovery, the euro could take additional losses.
Gold – Gold Hits 6-Week Low
Fears regarding the pace of the global economic recovery following the downgrade of five Spanish region’s credit ratings sent the price of gold to a six-week low during European trading yesterday. The precious metal fell close to $20 an ounce yesterday, eventually trading as low as $1704.50 before bouncing back to the $1708 level.
Today, gold traders will want to pay attention to several potentially significant euro-zone news events. Any indications that the EU debt crisis is worsening could result in the price of gold resuming its recent downward trend over the course of the day. Conversely, better than expected news could help gold recoup some of its recent losses.
Crude Oil – Crude Oil Extends Bearish Trend amid Euro-Zone Fears
The price of crude oil tumbled throughout the day yesterday, as concerns regarding global economic growth led to speculations that demand for oil will continue to fall. The news seemed to outweigh supply side fears resulting from the escalating conflict in Syria. Crude fell by more than $3 a barrel during the European session to trade as low as $85.75.
Today, oil traders will want to focus on the US Crude Oil Inventories figure, scheduled to be released at 14:30 GMT. Analysts are forecasting the figure to come in at 2.0M. Anything higher than the forecasted number may generate additional fears that demand for oil in the US is decreasing, which could lead to additional losses for crude.
Technical News
EUR/USD
There is a fresh bearish cross forming on the weekly chart’s Slow Stochastic indicating a bearish correction might take place in the nearest future. The downward direction on the daily chart’s Momentum oscillator also supports this notion. Going short with tight stops might be the right strategy today.
GBP/USD
The GBP/USD cross has experienced a bearish trend for the week. 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 oversold territory, indicating that an upward correction will happen anytime soon. Going long with tight stops might be a wise choice.
USD/JPY
The pair has recorded much bullish behavior in the past several days. However, the technical data indicates that this trend may reverse anytime soon. For example, the daily chart’s Stochastic Slow signals that a bearish reversal is imminent. Going short with tight stops might be a wise choice.
USD/CHF
The cross has been dropping for the past week now, as it now stands at the 0.9260 level. The Slow Stochastic of the weekly chart shows a bullish cross has recently formed, indicating that an upward correction is imminent. This view is also supported by Williams Percent Range. Going long might be a wise choice.
The Wild Card
Silver
The Relative Strength Index on the daily chart is approaching the oversold zone, signaling that an upward correction could take place in the near future. Additionally, a bullish cross has formed on the same chart’s Slow Stochastic. This may be a good time for forex traders to open long positions ahead of possible bullish movement.
Forex Market Analysis provided by ForexYard.
© 2006 by FxYard Ltd
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