Source: ForexYard
Comments from an EU finance minister earlier this week, in which he said that the euro’s recent bullish movement is threatening to hurt exports in the region, continued to weigh down on the EUR/USD yesterday. Meanwhile, speculations that future Japanese monetary easing will not be as aggressive as once thought, continued to boost the yen. Today, analysts are forecasting significantly higher amounts of volatility in the marketplace, as the US is scheduled to release building permits, unemployment claims and manufacturing data. Better than expected news may encourage risk taking, which would boost higher-yielding currencies like the euro.
Economic News
USD – Investors Closely Watching today’s US Manufacturing Data
The USD/JPY extended its bearish trend yesterday, as speculations that new monetary easing steps to be initiated by the Bank of Japan will not be as aggressive as once thought continued to boost the yen. The pair fell more than 100 pips during the first part of the day, eventually trading as low as 87.77, before staging a minor upward correction during mid-day trading to reach the 88.30 level. Against the Swiss franc, the greenback was relatively stable for most of the day. The USD/CHF lost some 30 pips during morning trading, to reach as low as 0.9285, before bouncing back to 0.9315 later in the day.
US news is expected to be the main focus of today’s trading session. Traders will want to pay particular attention to the Building Permits and Unemployment Claims figures, set to be released at 13:30 GMT, followed by the Philly Fed Manufacturing Index at 15:00. Should either of the indicators come in above their forecasted levels, higher-yielding currencies, including the Australian dollar, Swiss franc and British pound, may see bullish movement against the safe-haven greenback during afternoon trading.
EUR – EU Finance Minister Comments Sends EUR/USD Lower
After a brief bullish correction during early morning trading yesterday, the EUR/USD resumed its downward trend later in the day. Analysts attributed the bearish movement to recent comments from the EU finance minister, in which he said that the euro’s recent gains threaten to hurt the export industry in the region. The EUR/USD fell from a peak of 1.3323 to reach as low as 1.3255 during afternoon trading. The common-currency had more luck against the British pound. The EUR/GBP advanced more than 30 pips during European trading to reach as high as 0.8312.
Today, euro traders will want to pay attention to the ECB Monthly Bulletin, scheduled to be released at 9:00 GMT. The bulletin outlines the ECB’s forecasts of the future economic situation in the euro-zone. If the report forecasts economic growth in the region, risk taking among investors could help the euro against its main rivals. Later in the day, US news also has the potential to impact the common-currency, with better than expected data expected to boost riskier currencies.
Gold – Gold Sees Modest Downward Correction
Gold prices took moderate losses during European trading yesterday, but remained within reach of a recent two-week high, as concerns regarding US lawmaker’s ability to raise the debt ceiling helped keep demand for the precious metal high. Gold fell more than $10 an ounce during morning trading, eventually reaching as low as $1673.38 before bouncing back to the $1677 level.
Today, gold traders will want to monitor US news and its impact on currency pairs like the EUR/USD and GBP/USD. If the news leads to upward movement for either of the pairs, gold would become more affordable for international buyers, which could result in upward movement for the precious metal.
Crude Oil – Increased Demand for Oil in US Boosts Prices
An increase in American demand for crude oil, highlighted by a significantly lower than forecasted US Crude Oil Inventories figure, led to bullish movement for crude oil during afternoon trading. Overall, the commodity gained more than $0.80 a barrel during the European session to reach as high as $93.91.
Today, crude oil traders will want to pay attention to the US Building Permits and Philly Fed Manufacturing Index figures, scheduled to be released at 13:30 and 15:00 GMT, respectively. If either of the indicators comes in above their forecasted levels, risk taking could give oil prices an additional boost.
Technical News
EUR/USD
A bearish cross has recently formed on the weekly chart’s Slow Stochastic, indicating that a downward correction could occur in the coming days. This theory is supported by the Williams Percent Range on the same chart, which is currently in overbought territory. Opening short positions may be the smart choice for this pair.
GBP/USD
The Bollinger Bands on the weekly chart are narrowing, indicating that this pair could see a shift in price in the near future. Furthermore, a bearish cross has formed on the same chart’s MACD/OsMA, indicating that the shift could be bearish. Opening short positions may be the smart choice for this pair.
USD/JPY
The Relative Strength Index on the weekly chart is in overbought territory, indicating that a downward correction may occur in the coming days. Furthermore, a bearish cross has formed on the same chart’s Slow Stochastic. Traders may want to open short positions for this pair.
USD/CHF
The Bollinger Bands on the weekly chart are narrowing, indicating that a price shift is likely to occur in the near future. Additionally, the MACD/OsMA on the same chart appears close for forming a bullish cross, indicating that the price shift could be upward. Opening long positions may be the best choice for this pair.
The Wild Card
Platinum
Both the Relative Strength Index and Williams Percent Range on the daily chart have moved into overbought territory, indicating that a downward correction could occur in the near future. This may be a good time for forex traders to open short positions, ahead of a possible bearish correction.
Forex Market Analysis provided by ForexYard.
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