Source: ForexYard
Following a slow trading day yesterday, traders can look forward to significant volatility today, as significant euro-zone news is scheduled to be released. A press conference from the European Central Bank, scheduled for 13:30 GMT, is expected to shed some light on the current state of the euro-zone economic recovery. Additionally, Greece’s deadline for completing a debt swap is tonight at 20:00 GMT. Unless positive developments are seen with regards to the Greek situation, the euro could extend its losses going into Friday.
Economic News
USD – ADP Non-Farm Figure Boosts USD
The US dollar saw gains against the Japanese yen yesterday, following the release of a better than expected ADP Non-Farm Employment Change report. The ADP figure, which is considered a valid predictor of Friday’s Non-Farm Employment Change, came in at 216K, well above the expected level of 204K. Following the news, the USD/JPY shot up some 20 pips, reaching as high as 80.95, before staging a slight downward correction. Against the euro, the dollar was able to largely maintain earlier gains. The EUR/USD spent much of the day trading around the 1.3105 level.
Today, market sentiment will likely be determined by euro-zone news. Specifically, a press conference from the European Central Bank is expected to give a good indication of the current state of the euro-zone economic recovery. Any positive developments could result in the USD turning bearish against the euro. In addition, the weekly US Unemployment Claims is expected to show further gains for the US employment sector ahead of Friday’s all-important Non-Farm Payrolls figure. If true, the dollar may be able to extend its gains against the yen.
EUR – ECB Press Conference Set to Impact EUR
The euro was relatively subdued throughout yesterday’s trading session, as investors eagerly await any news regarding a Greek debt swap. Greece needs to complete a debt swap with its private investors before it is able to receive a badly needed bailout package. After hitting a three-week low vs. the USD, the euro bounced back slightly during the morning session, reaching as high as 1.3163. That trend did not last however, and by the end of the European session the EUR/USD was once again trading below 1.3100.
Turning to today, in addition to any news regarding the Greek debt swap, traders will also want to pay attention to a press conference from the European Central Bank (ECB), scheduled for 13:30 GMT. The press conference will likely be a good indicator of the overall health of the euro-zone economies. With concerns now growing that the Spanish economy is facing a possible crisis, the press conference may result in further euro losses ahead of the Greece’s debt swap deadline later tonight.
AUD – Aussie Reverses Gains against USD
The Australian dollar moved up against its US counterpart throughout the morning session yesterday, reaching as high as 1.0582, before turning bearish once again. The aussie’s gains were limited by a worse than expected Australian GDP figure, as well as investor concerns regarding the upcoming Greek debt swap. Fears that Greece will fail to complete the debt swap, have resulted in investors moving their funds away from riskier assets, like the AUD.
Turning to today, traders will want to pay attention to the ECB Press Conference, scheduled to take place at 13:30 GMT. Any negative statements regarding the euro-zone economic recovery, could lead to an increase in risk aversion. The AUD may drop further as a result. Additionally, any negative news regarding the Greek debt swap could weigh down on the aussie.
Crude Oil – Crude Oil Drops amid Euro-Zone Growth Fears
After reaching as high as $105.57 a barrel during mid-day trading yesterday, crude oil once again began to fall after fears regarding the upcoming Greek debt swap sent investors to safe-haven assets. The Greek news has raised doubts about the overall pace of the global economic recovery, despite positive growth out of the US. As a result, the commodity was trading around the $104.60 level by the end of the European session.
Turning to today, traders will want to continue focusing on European news. Specifically, the ECB Press Conference will likely be a good indicator or risk appetite in the marketplace. Should the press conference result in increased pessimism in the euro-zone economic recovery, the price of oil could fall further ahead of the all-important US Non-Farm Payrolls figure on Friday.
Technical News
EUR/USD
The Williams Percent Range on the daily chart has drifted into oversold territory, indicating that upward movement could occur in the near future. The Slow Stochastic on the same chart appears to be close to forming a bullish cross. Traders will want to keep an eye on this indicator. If the cross forms, it could be a sign of an impending upward correction.
GBP/USD
Most long-term technical indicators place this pair in neutral territory, meaning that no definitive trend is apparent at the moment. Traders may want to take a wait and see approach, as a clearer picture may present itself later on.
USD/JPY
Following the bearish trend the pair has seen in recent days, technical indicators are now showing this pair in neutral territory. The Williams Percent Range on the daily chart is at -50, while the Relative Strength Index is right around the 60 level. Taking a wait and see approach may be the wise choice.
USD/CHF
The daily chart’s Williams Percent Range is currently in overbought territory, indicating that a downward correction may occur in the near future. A bearish cross on the 8-hour chart’s Slow Stochastic supports this theory. Going short may be a wise choice for this pair.
The Wild Card
CHF/JPY
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 Relative Strength Index on the 8-hour chart, which has dropped into oversold territory. Forex traders may want to go long ahead of a possible upward correction.
Forex Market Analysis provided by ForexYard.
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