The yen saw huge gains against virtually all of its main currency rivals just before the start of the overnight session, as the fallout from last week’s tsunami continue to boost the safe-haven currency. The USD/JPY fell over 300 pips in a matter of minutes and reached a new record low before bouncing back throughout the night. Currently the pair is trading at the 79.50 level.
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 | 1.4020 | 1.6115 | 80.05 | 1.0010 | 0.9915 | 0.8765 |
| 1.3990 | 1.6095 | 79.85 | 0.9090 | 0.9895 | 0.8745 | |
| 1.3960 | 1.6065 | 79.55 | 0.9060 | 0.9865 | 0.8715 | |
| Support | 1.3900 | 1.6005 | 78.95 | 0.9000 | 0.9805 | 0.8655 |
| 1.3870 | 1.5975 | 78.65 | 0.8970 | 0.9775 | 0.8625 | |
| 1.3850 | 1.5955 | 78.45 | 0.8950 | 0.9755 | 0.8605 |
Economic News
USD – Dollar Sees Correction against Yen in Overnight Session
The US dollar continued to make gains against the euro in the overnight session, as investors continue to seek out safe haven currencies in the aftermath of last week’s devastating Japanese earthquake and tsunami. While the EUR/USD is once again above the 1.3900 level, the pair has dropped close to 100 pips in the last 24 hours.
Meanwhile, the dollar was able to rebound against the yen after tumbling late last night. The USD/JPY reached a new record low at 76.40 before staging a correction throughout the overnight session. Currently the pair stands at 79.50.
Today, traders are advised to follow the continuous developments coming out of Japan. In particular, the threat of a nuclear disaster continues to exert great influence over the markets. Rumors of possible Japanese government intervention to stabilize the yen have caused pairs like the USD/JPY and GBP/JPY to stabilize. At the same time, further turmoil in Japan is likely to cause the dollar to fall again today.
In addition, traders will want to pay attention to the latest US Unemployment Claims figure set to be released at 12:30 GMT today. While investors are primarily focused on what is going on in Japan, a drop in US unemployment over last week may lead to short term gains for the dollar.
EUR – Risk Aversion Sends Euro Plummeting
The euro took heavy losses against virtually all of its main currency rivals during the Asian session, as risk aversion continues to dominate the marketplace. The ongoing crisis in Japan is sending investors toward safe haven assets, like the US dollar, Japanese yen and Swiss franc.
In addition to the EUR/USD falling toward the 1.3900 level, the EUR/CHF dropped well over 100 pips last night, and is currently trading right around the 1.2525 level. The EUR/JPY fell an astounding 400 pips last night, but has gradually recovered since. Currently the pair stands at the 110.20 level.
Turning to today, the news out of Japan is likely to dictate the direction the euro goes. Traders will want to pay attention to two possible developments. First, the ongoing threat of a nuclear disaster is likely to drive riskier currencies like the euro farther down. Second, rumors of Japanese government intervention in the currency market, should the yen get too strong, may turn out to be beneficial for the 17-nation common currency. Should the Bank of Japan decide to intervene to stabilize the markets today, the euro may be able to recoup some of its losses.
JPY – Nuclear Threat Sends Yen Soaring
The aftermath of last week’s Japanese earthquake and tsunami continue to drive investors to the safe-haven yen. The currency saw huge gains against the US dollar, euro, UK pound and Swiss franc last night before correcting itself during the overnight session.
Analysts attribute the yen’s extreme bullish behavior to the ongoing threat of a nuclear disaster in Japan that has caused investors to flock to more stable assets. At the same time, rumors that the Bank of Japan will soon move in to halt the yen’s upward momentum have caused some stability to return to the marketplace.
Today, traders will want to carefully watch for any developments in the ongoing fight to contain the potentially significant nuclear threat in Japan. With the full scope of the devastation in the country still unknown and new problems appearing all the time, markets are expected to remain erratic for the time being.
Crude Oil – Crude Oil Resumes Bearish Behavior
Following a steep increase in the price of oil at the beginning of the day yesterday, the commodity turned bearish by afternoon trading and has yet so stop dropping in price. Currently oil is trading at $97.55 a barrel, down from $99.57 yesterday.
Analysts attributed the bearish behavior to the latest US Crude Oil Inventories figure, which came in at 1.7M, released yesterday. The high figure signaled that demand is weakening in the world’s biggest oil consuming nation. As a result, prices began to fall.
Turning to today, traders will want to pay attention to any developments in Japan that may affect the marketplace. As investors continue to abandon riskier assets due to the turmoil in Japan, commodities such as oil are likely to drop further.
Technical News
EUR/USD
The Relative Strength Index and Williams Percent Range on both the 8-hour and daily charts show this pair floating in neutral territory. With technical indicators not showing a specific direction for the pair today, traders may want to take a wait and see approach today.
GBP/USD
The Williams Percent Range on the daily chart shows this pair in oversold territory, indicating that a bullish correction could occur today. This theory is supported by the RSI on the 4-hour chart. Going long with tight stops may turn out to be the preferred strategy today.
USD/JPY
Virtually all technical indicators show this pair in oversold territory, meaning that an upward correction is likely to take place today. The Stochastic Slow on the 8-hour chart has formed a bullish cross, while the 4-hour chart’s RSI has moved into the oversold zone. Opening long positions may pay off today.
USD/CHF
A bullish cross has formed on the 8-hour chart’s Slow Stochastic, indicating upward movement is likely to occur in the near future. Furthermore, the Bollinger Bands have begun to widen on the same chart, meaning a price shift is expected. Going long seems to be the preferred strategy today.
The Wild Card
AUD/USD
The Williams Percent Range on the daily chart has just crossed into the oversold zone. Meanwhile, the 4-hour chart’s RSI is hovering just above the lower support line. Should it cross into oversold territory, forex traders will have a great opportunity to open long positions and take advantage of the impending bullish move.
Written by Forexyard.com