Source: ForexYard
The euro spent most of the day slightly above recent three-month lows hit against the US dollar and Japanese yen. Greece’s inability to form a new government has raised the prospects that a new election will be held in the coming weeks, which has resulted in additional risk aversion in the marketplace. Turning to today, traders will want to pay attention to a batch of US data, including the PPI figure and the Prelim UoM Consumer Sentiment. Both indicators are considered valid indicators of overall economic health and have the potential to create market volatility before markets close for the week. Should any of the data come in above expectations, the USD may be able to see some upward movement against the yen today.
Economic News
USD – Dollar Turns Bearish vs. GBP
The dollar turned bearish against several of its main currency rivals yesterday, as positive news out of Australia and the UK led to moderate risk taking in the marketplace. A significantly better than expected Australian Employment Change figure gave the aussie a boost vs. the greenback. Overall, the AUD/USD was up close to 100 pips for the day. Following the Bank of England’s decision to hold interest rates steady during mid-day trading, the GBP/USD began moving upward. The pair eventually gained close to 90 pips to peak at 1.6180 during the afternoon session.
Ahead of markets closing for the week, traders will want to pay attention to several potentially significant indicators out of the US which may generate market volatility. The US PPI figure, set to be released at 12:30 GMT, is forecasted to come in at 0.0%. Should the figure come in above expectations, the dollar may be able to reverse yesterday’s downward trend. Later in the day, traders will want to pay attention to the Prelim UoM Consumer Sentiment, scheduled for 13:55 GMT. Analysts are predicting the figure to come in at 76.4, which if tru, could give the greenback an additional boost during the afternoon session.
EUR – Fresh Greek Worries Lead to Additional EUR Losses
Investor concerns about the Greek political situation kept the euro near a three-month low against both the US dollar and Japanese yen during trading yesterday. Greek political parties have so far failed to form a government, raising the prospects that fresh elections will be held in the coming weeks. After dropping as low as 1.2924 during early morning trading, the EUR/USD staged a slight recovery, eventually reaching as high as 1.2970 toward the close of the European session. Against the yen, the euro fell as low as 102.94 before staging an upward correction and climbing as high as 103.72.
Turning to today, euro traders will want to continue monitoring any developments out of the euro-zone, particularly with regards to the Greek political situation. With investors largely remaining bearish toward the common-currency, traders should be warned that the possibility for further downward movement exists before markets close for the weekend. That being said, with potentially significant US news set to be released this afternoon, the euro may be able to capitalize on the figures if they come in below expectations.
Gold – Gold See Slight Boost during Afternoon Trading
Gold spent most of yesterday’s session trading flat, as investors continued to bet against the precious metal amid concerns regarding the global economic recovery. Gold has seen steady downward movement throughout the week, as euro-zone political worries combined with poor US fundamental data have resulted in risk aversion in the marketplace. That being said, gold received a slight boost, following a better than expected US Unemployment Claims figure. Prices reached as high as $1601.37 an ounce after dropping as low as $1585.12 during the morning session.
Turning to today, the US PPI and Prelim UoM Consumer Sentiment may lead to volatility for gold. Better than expected news could result in moderate risk taking in the marketplace, which may boost prices. At the same time, should any of today’s news disappoint, gold could resume its bearish movement.
Crude Oil – US Unemployment Claims Helps Boost Oil
After falling for six consecutive days, crude oil was able to stage a slight upward correction during the afternoon session, following a better than expected US Unemployment Claims figure. The news signaled a possible increase in oil demand in the US, the world’s biggest oil consuming country. The price of oil rose from a low of $96.05 a barrel to $97.64 toward the close of European trading.
Turning to today, oil traders will want to pay close attention to the US PPI figure and the Prelim UoM Consumer Sentiment. Should either of the indicators come in above expectations, it may boost confidence in the US economic recovery which could result in additional upward movement for crude oil before markets close for the week.
Technical News
EUR/USD
A bullish cross on the daily chart’s Slow Stochastic indicates that this pair could see upward movement in the near future. This theory is supported by the Williams Percent Range on the same chart, which has dropped into oversold territory. Going long may be a wise choice for this pair going into the rest of the week.
GBP/USD
The daily chart’s Bollinger Bands are beginning to narrow, indicating that this pair could see a price shift in the near future. Furthermore, a bearish cross on the weekly chart’s Slow Stochastic indicates that this pair could see downward movement in the coming days. This may be a good time to open short positions ahead of a possible downward breach.
USD/JPY
Long term technical indicators are providing mixed signals for this pair. While the daily chart’s Williams Percent Range is in oversold territory, meaning that upward movement could occur, the weekly chart’s MACD/OsMA has formed a bearish cross. Taking a wait and see approach may be the wise choice for this pair.
USD/CHF
A bearish cross on the daily chart’s Slow Stochastic indicates that this pair could see downward movement in the near future. This theory is supported by the Williams Percent Range on the weekly chart, which has just crossed over into overbought territory. Going short may be the wise choice for this pair.
The Wild Card
Gold
A bullish cross appears to be forming on the daily chart’s Slow Stochastic, indicating that upward movement could be seen in the near future. Furthermore, the Relative Strength Index on the daily chart has dropped into oversold territory. Forex traders may want to open long positions ahead of a possible upward breach.
Forex Market Analysis provided by ForexYard.
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