The euro turned bearish once again in trading yesterday, as investors continued to revert back to safe-haven currencies following the rejection of Greece’s debt swap deal. Positive manufacturing numbers from much of the euro-zone were shrugged off, as fears of further fallout from the region’s debt crisis continue to dominate market sentiment. Today, traders will want to focus on US data, particularly the FOMC Statement, as it is likely to dictate the direction the market takes.
Forex Market Trends
| EUR/USD | GBP/USD | USD/JPY | USD/CHF | AUD/USD | EUR/GBP | |
| Daily Trend |  |
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| Weekly Trend | |
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| Resistance | 1.3086 | 1.5685 | 78.15 | 0.9442 | 1.0566 | 0.8388 |
| 1.2981 | 1.5595 | 77.79 | 0.9403 | 1.0497 | 0.8357 | |
| 1.2916 | 1.5539 | 77.57 | 0.9371 | 1.0455 | 0.8339 | |
| Support | 1.2864 | 1.5495 | 77.39 | 0.9339 | 1.0421 | 0.8323 |
| 1.2812 | 1.5450 | 77.22 | 0.9300 | 1.0387 | 0.8308 | |
| 1.2747 | 1.5394 | 76.99 | 0.9237 | 1.0344 | 0.8290 |
Economic News
USD – Dollar up Following Increase in Risk Aversion
Fresh concerns over the euro-zone debt crisis caused investors to revert back to safe-haven currencies yesterday, which led to the USD climbing vs. most of its main counterparts. Following the rejection of Greece’s debt swap deal, concerns began to develop over Portuguese debt. Portugal is widely seen as the country closest to default after Greece and negative news out of the country tends to boost the dollar. The EUR/USD dropped well below the psychologically significant 1.3000 level yesterday, while the AUD/USD tumbled over 100 pips.
Turning to today, significant US news is scheduled to be released that could lead to market volatility. Traders will want to note the results of the Pending Home Sales figure as well as the FOMC Statement. The home sales figure is forecasted to come in well below last month’s, which if true may cause the USD to slip against fellow safe-haven currencies like the JPY and CHF. Similarly, the FOMC is forecasted to announce that record low US interest rates are likely to remain for the foreseeable future. If true, the greenback could turn bearish going into the rest of the week.
EUR – Positive Euro-Zone Indicators Fails to Boost EUR
Ongoing concerns regarding the prospect of Greece defaulting on its debt, as well as fresh worries regarding Portugal’s debt caused the euro to tumble vs. the US dollar in yesterday’s trading. Investors once again reverted back to the safe-haven dollar as it became clear that the euro-zone crisis is far from over. Despite better than expected euro-zone manufacturing indicators, the EUR/USD once again dropped below the 1.3000 level. Although the pair is still well above its recent 17-month low, analysts are quick to warn that further negative European news could bring it down further.
Turning to today, euro traders will want to pay attention to the German Ifo Business Climate figure at 9:00 GMT. The indicator is forecasted to come in above last month’s, which if true, may help the common currency against some of its main rivals, like the JPY and CHF. At the same time, it will likely take significantly better euro-zone news before the EUR/USD is able to break the 1.3100 resistance level. Additionally, traders will want to note the results of the UK Prelim GDP figure. The results should gauge risk appetite in the markets, with a better than expected number likely to boost the euro.
JPY – JPY Takes Losses Following BOJ Rate Decision
The Bank of Japan’s widely expected decision to maintain its current economic policy triggered a largely bearish day for the Japanese yen yesterday. The USD/JPY jumped to a four-week high during European trading, while the GBP/JPY climbed well over 100 pips. Given the appetite for risk aversion among investors, the downward movement by the yen was not widely predicted by analysts.
Turning to today, yen traders will want to pay attention to US news scheduled to be released throughout the day. Analysts are predicting the indicators, particularly the Pending Home Sales number, to come in well below last month’s results. If so, further risk aversion may occur could cause the yen to reverse some of today’s losses.
Crude Oil – Crude Oil Tumbles amid Risk Aversion
Euro-zone debt fears combined with reduced Middle East tensions caused the price of crude oil to slip during trading yesterday. Investors largely reverted back to safe-haven currencies like the USD throughout the day which led to a drop in commodities including oil. Oil prices dropped well over $1 during European trading.
Today, traders will want pay attention to several US indicators, particularly the Crude Oil Inventories number. A significant increase in US crude stockpiles is forecasted, which if true may bring the commodity further down for the rest of the week. Traders will also want to note the FOMC Statement at 17:30 GMT. If the Fed decides to maintain its current policy of near zero interest rates, oil may drop further if risk aversion takes place.
Technical News
EUR/USD
Long term technical indicators are showing this pair in oversold territory, meaning that an upward correction could take place in the coming days. The weekly chart’s Relative Strength Index is currently at 20, while the Williams Percent Range on the same chart has dropped below the -80 level. Going long may be a wise strategy for the pair.
GBP/USD
According to technical indicators on the daily chart, this pair has breached the overbought zone, and could see a downward correction in the near future. A bearish cross has formed on the Stochastic Slow and the Williams Percent Range has gone above -10. Traders may want to go short on this pair.
USD/JPY
Technical indicators on both the daily and weekly charts are showing this pair in neutral territory, meaning that no defined trend is apparent at this time. Traders may want to take a wait and see approach for the pair, as a clearer picture may present itself in the near future.
USD/CHF
The daily chart’s technical indicators are showing that following last week’s bearish movement, the USD/CHF may see an upward correction in the near future. The Stochastic Slow has formed a bullish cross, while the Williams Percent Range is hovering in the oversold zone. Going long may prove to be a wise choice.
The Wild Card
CAD/CHF
The daily chart’s technical indicators are showing that this pair has entered the oversold region and may see a bullish correction in the near future. The Stochastic Slow has formed a bullish cross, while the Williams Percent Range is hovering around the -90 level. Forex traders may want to go long in their positions today ahead of any upward breach.
Written by Forexyard.com