Source: ForexYard
The euro saw substantial bullish movement on Friday, amid signs that the euro-zone economic recovery is gaining momentum. Meanwhile, speculations that the Bank of Japan will take additional monetary easing steps in the near future caused the yen to extend its recent bearish trend. This week, traders can anticipate volatility in the marketplace as the US gets ready to release a batch of significant data. Today’s Pending Home Sales figure, a consumer confidence report tomorrow, the Advance GDP on Wednesday, and finally the Non-Farm Payrolls figure on Friday, can all help the US dollar if they signal improvements in the US economy.
Economic News
USD – All Eyes On US Employment Data This Week
The USD/JPY shot up to a fresh 2 ½ year high on Friday, as speculations that the Bank of Japan will ease monetary policy further continued to weigh down on the yen. The pair gained more than 70 pips during the first half of the day, eventually reaching as high as 91.18, before dropping back to 90.82, where it finished out the week.
Following a worse than expected US New Home Sales figure on Friday, investors shifted their funds to safe-haven assets, which helped the dollar reverse some of its recent losses against the Swiss franc. The USD/CHF gained more than 50 pips during afternoon trading, before closing out the week at 0.9268.
This week, traders can anticipate significant volatility in the marketplace, as attention shifts to the all-important US Non-Farm Payrolls figure, set to be released on Friday. In addition, traders will also want to pay attention to several other indicators out of the US throughout the week, including today’s Pending Home Sales figure and Wednesday’s ADP Non-Farm Employment Change and Advance GDP figures.
EUR – Signs of Improvements in EU Turns Euro Bullish
The euro saw gains against most of its main currency rivals on Friday, following the release of a better than expected German Ifo Business Climate figure and signs that the European banking sector is gaining strength. The EUR/USD gained more than 100 pips over the course of the day, eventually trading as high as 1.3475 before dropping back to 1.3458. Against the Japanese yen, the common-currency traded as high as 122.77, its highest level since April, 2011. The EUR/JPY finished out the week at 122.21.
In addition to the US news being released this week, euro traders will also want to pay attention to a batch of EU economic indicators. Specifically, tomorrow’s Gfk German Consumer Climate, Wednesday’s Spanish Flash GDP, German retail sales data on Thursday, and finally, manufacturing PMI’s for both Spain and Italy on Friday, could all boost the euro further if they indicate that the euro-zone economic recovery is gaining additional momentum.
Gold – Gold Takes Losses Following Positive EU News
Gold prices fell more than $16 an ounce on Friday, following positive German data which caused investors to shift their funds away from safe-haven assets. The precious metal traded as low as $1655.70 before bouncing back to $1658.44, where it finished out the week.
This week, gold traders will want to pay attention to a batch of US and euro-zone economic indicators, and their affect on the euro. Any signs that the global economic recovery gaining momentum is likely to boost the euro further, which could result in additional losses for gold prices.
Crude Oil – Crude Oil Remains Bullish
Crude oil prices remained within reach of their recent four-month high on Friday, as positive euro-zone news led to risk taking in the marketplace. The commodity traded as high as $96.53 a barrel during mid-day trading, before a slight downward correction to close out the week at $96.01.
This week, oil traders can anticipate heavy volatility in the marketplace as investors turn their attention to a batch of significant US data. If any of the news indicates growth in the US economy, speculations that American demand for oil will increase could help crude extend its bullish run.
Technical News
EUR/USD
A bearish cross is close to forming on the weekly chart’s Slow Stochastic, indicating that a downward correction could occur in the near future. 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 best option for this pair.
GBP/USD
The Williams Percent Range on the weekly chart has fallen in into oversold territory, signaling that an upward correction could occur in the near future. This theory is supported by the Relative Strength Index on the daily chart, which is currently just below 30. Opening long positions may be the best choice for traders.
USD/JPY
The Relative Strength Index on the weekly chart is currently overbought territory, indicating that a downward correction could occur in the near future. Furthermore, the Slow Stochastic on the same chart has formed a bearish cross. Opening short positions may be the best choice for traders.
USD/CHF
Most long-term technical indicators show this pair trading in neutral territory, meaning a definitive trend is difficult to predict at this time. Traders may want to take a wait and see approach for this pair, as a clearer picture is likely to present itself in the near future.
The Wild Card
AUD/USD
The daily chart’s Slow Stochastic has formed a bullish cross, indicating that an upward correction could occur in the near future. Additionally, the Williams Percent Range on the same chart has fallen into oversold territory. This may be a good time for forex traders to open long positions, ahead of possible upward movement.
Forex Market Analysis provided by ForexYard.
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