The US dollar opened this week moderately stronger versus the euro Monday as traders continued last week’s shift into safer assets. As of late trading Monday, however, the EUR/USD pair shifted back into a bullish posture as traders turned their focus to the interest rate differentials between the Atlantic states. After briefly touching 1.4050, the pair found support and is currently moving towards 1.4300.
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 | 1.4307 | 1.6292 | 81.33 | 0.8809 | 1.0673 | 0.8785 |
| 1.4292 | 1.6282 | 81.22 | 0.8801 | 1.0661 | 0.8778 | |
| 1.4283 | 1.6278 | 81.18 | 0.8798 | 1.0654 | 0.8774 | |
| Support | 1.4267 | 1.6268 | 81.07 | 0.8790 | 1.0642 | 0.8767 |
| 1.4260 | 1.6262 | 81.00 | 0.8786 | 1.0636 | 0.8764 | |
| 1.4244 | 1.6252 | 80.88 | 0.8778 | 1.0624 | 0.8758 |
Economic News
USD – US Dollar Continues Yesterday’s Slide
The US dollar opened this week moderately stronger versus the euro Monday as traders continued last week’s shift into safer assets. As of late trading Monday, however, the EUR/USD pair shifted back into a bullish posture as traders turned their focus to the interest rate differentials between the Atlantic states. After briefly touching 1.4050, the pair found support and is currently moving towards 1.4300.
Soft economic data out of the American economy yesterday had many investors seeking market direction elsewhere. US housing and industrial figures for April came in lower than expectations and the capacity utilization rate was also in just below forecasts. Alternately, CPI figures from the euro zone Monday showed stable growth. This data together helped turn many investors’ attention back towards the interest rate differentials in the US and Europe, which caused a shift away from the greenback.
As for today, the euro zone will be absent as its ministers congregate for another meeting of the Economic and Financial Affairs Council (ECOFIN) in order to discuss the region’s finances. The US, on the other hand, is scheduled to release its crude oil inventory data and its Treasury currency report. If forex traders witness another day of soft data, the weakness of the USD in recent trading may become exacerbated as more traders shift into the higher yielding euro.
EUR – EUR Remains Bullish Despite Little News
The euro rose versus the US dollar for the second consecutive day yesterday, with the pair’s price reaching near 1.4280 as of this morning. Soft data out of the American economy Monday and yesterday forced a reevaluation by many investors who went long on the USD following the European Central Bank’s (ECB) cloudy rate statement two weeks back.
Yesterday’s significantly weaker fundamentals out of the American economy were only one part of the story, however. The euro zone published its consumer price index (CPI) inflationary reports which showed solid, stable growth, year-on-year. The core data also showed better growth than was expected. This combination of data from these two economic rivals generated a heightened intrigue in the comparative interest rates as risk sentiment got shifted. The result was for the interest rate bulls to outpace the debt woe bears in yesterday’s session, driving the EUR higher versus the USD.
As for today, the euro zone will be absent from the calendar as its ministers congregate for another meeting of the Economic and Financial Affairs Council (ECOFIN) in order to discuss the region’s finances. Hawkish statements could hint towards a tightening monetary policy in the near future, but traders should be wary of a return to risk aversion should the meeting produce less-than-stellar commentary. In the latter case, the EUR could see its bearishness return, especially since it has yet to outpace the strength of its regional rival, the Swiss franc (CHF).
JPY – JPY Remains in Consolidating Pattern
The Japanese yen (JPY) has been trading with somewhat mixed results since early last week, with gains made against several currencies and losses elsewhere. After a week of ups and downs, the Japanese yen appears set to make gains today as investors seek safety from recent turmoil and as the Bank of Japan (BOJ) published several reports yesterday morning which could help the island economy make gains. The dominant stance of risk aversion overarching last week’s trading environment has many traders moving towards the yen against the higher yielding currencies like the euro and British pound.
The USD/JPY was seen trading somewhat higher this morning, finding support near 80.70 and moving up towards 80.90 at today’s opening Asian sessions. Japan’s core machinery orders report was published this morning and revealed a modest uptick which may help the island currency in today’s market hours. Market news released out of the US today will likely be the driving force behind JPY values, though, and traders would be wise to watch the US crude oil inventories report as its correlation to investment growth has gotten stronger lately.
Oil – Crude Oil Prices Hold near $98
Oil prices fell below $98 a barrel yesterday morning, surprisingly after the euro took off against its primary rival, the US dollar. US oil stockpiles rose over 3 million barrels for the second week in a row last week, and forecasts for today’s oil inventories report is for another increase of approximately 1.4 million barrels. The sudden plummeting value of the dollar had many analysts assuming that oil would find support in this morning’s trading, and so far we’ve seen some stability after yesterday’s plunge.
Whether oil traders decide to lift oil prices back from this recent plunge is yet to be determined, especially considering the strangeness of the inverse relationship to the USD yesterday. The greenback’s decline may have a delayed effect today and oil traders may see the price bouncing back if that is the case.
Technical News
EUR/USD
The EUR/USD has gone bullish yesterday, and currently stands at the 1.4280 level. The daily chart’s Slow Stochastic supports the pair to rise further today. However, the 4-hour chart’s Williams Percent Range signals that a bearish reversal will take place today. Entering the pair when the signs are clearer seems to be the wise choice today.
GBP/USD
There is a bullish cross forming on the daily chart’s Slow Stochastic indicating a bullish correction might take place in the nearest future. The upward direction on RSI also supports this notion. Going long with tight stops might be the right strategy today.
USD/JPY
The pair has been range-trading for a while now, with no specific direction. The Daily chart’s Slow Stochastic is providing us with mixed signals. All oscillators on the 4 hour chart do not provide a clear direction as well. Waiting for a clearer sign on the hourlies might be a good strategy today.
USD/CHF
The cross has been dropping for the past 2 days now, as it now stands at the 0.8790 level. The Relative strength Index of the 4-hour chart is already floating in the oversold territory indicating that a bullish correction might take place in the nearest future. Going long with tight stops may turn out to be the right choice today.
The Wild Card
CAD/CHF
The pair has dropped significantly in the last two days and peaked at the 0.9050 level. However, on the 8-hour chart RSI is floating in an oversold territory suggests that a bullish correction is impending. This might be a great opportunity for forex traders to enter the trend at a very early stage.
Written by Forexyard.com