Source: ForexYard
The euro saw a relatively bullish day yesterday, following the announcement that Greece approved a fresh set of austerity measures needed to receive a sorely needed bailout package. That being said, the common currency’s bullish trend stalled during mid-day trading, after doubts on whether Greece would be able to avoid defaulting on its debt surfaced. Today, traders will want to pay attention to a batch of euro-zone and US data. Specifically, the German ZEW Economic Sentiment and US Retail Sales figures are expected to generate market volatility.
Economic News
USD – US Retail Sales May Boost Dollar
The US dollar saw some downward movement to start off the week, after news that Greece’s parliament approved austerity measures it needs in order to qualify for a euro-zone bailout package. The news helped boost hopes that Greece would be able to avoid defaulting on its debt and drove investors to riskier assets throughout the day. The EUR/USD shot up over 80 pips following the news, and peaked at 1.3282 before staging a downward correction. The AUD/USD traded as high as 1.0777 before staging a reversal during mid-day trading.
Turning to today, in addition to monitoring the ongoing developments regarding the euro-zone debt crisis, traders will also want to pay attention to a batch of fundamental indicators that have the potential to generate market volatility. Specifically, the US Retail Sales and Core Retail Sales figures are likely to illustrate the current state of the US economy when they are released at 13:30 GMT. Analysts are forecasting that both figures will come in significantly higher from last month. If true, the US dollar may see some gains against its main currency rivals, such as the JPY and EUR.
EUR – EUR Sees Gains Following Greek News
Greece’s approval of fresh austerity measures late on Sunday night led to euro bullishness for much of the day yesterday. The EUR saw upward movement against most of its main currency rivals, including the US dollar, Japanese yen and Swiss franc after the news boosted investor hopes that Greece would receive a much needed bailout package. That being said, the bullish trend stalled during mid-day trading after it became clear that even with a euro-zone bailout, Greece could still default on its debt in March.
Today, traders will want to continue monitoring the situation in the euro-zone. Any additional announcements regarding the Greek debt crisis are likely to generate significant market volatility. Furthermore, attention should be given to the German ZEW Economic Sentiment figure, set to be released at 09:30 GMT. At the moment, analysts are forecasting the figure to come in at -11.6, which would be significantly better than last month. If true, the euro may be able to see some gains during tomorrow’s session.
AUD – Aussie Starts Week on a Bullish Note
The Australian dollar was able to start off Monday’s session on a positive note, following the downtrend it experienced to close out last week. The currency was able to recoup the losses it suffered against most of its main currency rivals on Friday, after positive Greek news boosted risk appetite in the marketplace. The AUD/USD peaked yesterday at 1.0776 before staging a slight downward correction. Against the Japanese yen, the Aussie gained over 60 pips before moving downward during mid-day trading.
Today, Aussie traders will want to focus on any additional announcements out of the euro-zone. Any positive news regarding Greece’s prospects for receiving a fresh bailout is likely to boost riskier currencies like the AUD. At the same time, with some analysts convinced that even with a bailout Greece would still default on its debt, investors may choose to revert back to safe-haven assets tomorrow.
Crude Oil – Risk Taking Turns Crude Oil Bullish
After closing out last week below the $99 a barrel level, crude oil received a boost during trading today following positive euro-zone news. The news briefly lifted oil above the psychologically significant $100 level before it stabilized around $99.60.
Today, the price of crude oil is likely to be determined by both euro-zone and US news. Any additional positive Greek news may help crude extend its bullish trend. Additionally, should today’s US Retail and Core Retail Sales figures come in above expectations, risk taking may go up as a result, which could lead to additional gains for oil.
Technical News
EUR/USD
The weekly chart’s Stochastic Slow is currently forming a bearish cross, indicating that downward movement could occur for this pair in the near future. This theory is supported by the daily chart’s Williams Percent Range, which is hovering close to the overbought zone. Traders may want to go short in their positions.
GBP/USD
A bearish cross on the weekly chart’s Stochastic Slow indicates that downward movement may occur in the coming days. That being said, most other long-term technical indicators show that this pair is range trading at the moment. Traders may want to take a wait-and-see approach, as a clearer picture may present itself later in the week.
USD/JPY
Most technical indicators on the daily chart show that this pair is overbought and could see a downward correction in the near future. These include the Relative Strength Index, which has cross above 70, and the Williams Percent Range, which is at -10. Going short may be the preferred strategy for this pair.
USD/CHF
The daily chart’s MACD/OsMA has formed a bullish cross, which typically means that upward movement could occur in the near future. This theory is supported by the Stochastic Slow on the weekly chart. Traders may want to go long in their positions for this pair.
The Wild Card
EUR/NOK
The Williams Percent Range on the daily chart is currently at the -90 level, indicating that the pair could see an upward correction in the near future. This theory is supported by the Relative Strength Index on the same chart, which is hovering around oversold territory. Forex traders may want to go long in their positions today ahead of a possible upward correction.
Forex Market Analysis provided by ForexYard.
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Moody’s Investor Service announcement on the state of the credit ratings of Spain and Italy have resulted to a drop in their borrowing costs at debt sales. However, the euro has gained against its major peers despite the negative news.
Tradervox.com (Dublin) – It is a tough day for the Euro today as Moody downgraded Italy, Spain and Portugal. The Greek deal is also on the radar with tomorrow’s meeting of European leaders. The single currency traded mostly in red below 1.3200 levels during the Asian session. But during the European session, it surged with positive data from Germany and also successful selling of Spanish bonds. 
The Euro started the week extremely strongly yesterday but just when we trying to analyze whether that strong start was due to continue, we saw a sharp turn of events as the Euro virtually lost all its hard fought gains of the morning. EUR/USD gained a massive 37 pips at the start of the day and this included the week starting with a gap. It shot up to a daily high of 1.3285 but then it took a sharp turn around midday and ended up closing at 1.3191, 19 pips away from opening price.
