With the US economy releasing a series of soft data reports, and President Obama falling in public opinion polls, the euro zone should be set to make a major jump against its Atlantic rival should it be capable of harping on yesterday’s hawkish rate announcement and potentially impending rate hike.
Forex Market Trends
| EUR/USD | GBP/USD | USD/JPY | USD/CHF | AUD/USD | EUR/GBP | |
| Daily Trend |  |
 |
 |
|
|
|
| Weekly Trend | |
|
|
|
|
|
| Resistance | 1.4897 | 1.6610 | 81.36 | 0.8585 | 1.0817 | 0.9020 |
| 1.4721 | 1.6502 | 80.78 | 0.8494 | 1.0716 | 0.8947 | |
| 1.4615 | 1.6432 | 80.55 | 0.8452 | 1.0670 | 0.8905 | |
| Support | 1.4439 | 1.6324 | 79.97 | 0.8361 | 1.0570 | 0.8833 |
| 1.4370 | 1.6287 | 79.60 | 0.8312 | 1.0516 | 0.8803 | |
| 1.4194 | 1.6179 | 79.02 | 0.8220 | 1.0415 | 0.8731 |
Economic News
USD – US Dollar Moderately Bullish as Euro Zone Rate Hints Underwhelm
The US dollar largely experienced mixed results yesterday but with moderately bullish sentiment against the EUR as hints at a future rate hike in the euro zone largely underwhelmed investors. The results so far have been for the value of the USD to increase and then hold versus its currency counterparts; albeit weakly.
The issue of interest rate differentials has generated market tension over the past several weeks and yesterday’s semi-hawkish statement from ECB President Trichet was expected to push the EUR much higher, but the USD ended the day stronger with investors betting on a higher probability for a Greece default. Soft global economic data has led many investors to focus more on debt concerns than future growth potential, which is helping the greenback make strides.
As for today, with the week coming to a close, traders will be focusing their attention on the manufacturing and industrial production figures out of Europe, Britain and the United States. The Chinese trade balance may also come into play, but with less significance for the other major currencies. The Canadian economy will also be publishing several significant reports, which could make today’s trading interesting. Traders should expect an added level of volatility today as investors try to gauge direction ahead of market closing.
EUR – Euro Zone Rate Statement Fails to Excite Traders
The euro felt pressure versus the US dollar this morning, with the pair’s price dropping sharply from its one-month high near 1.4650, reaching as low as 1.4520. Yesterday’s rate statement by the European Central Bank (ECB) was strongly hinting at an impending rate statement which should have shifted some momentum back into the 17-nation common currency. Forex traders appeared underwhelmed by the statement, however, as concerns over a potential Greece default outweighed the hawkish sentiment.
However, with the US economy releasing a series of soft data reports, and President Obama falling in public opinion polls, the euro zone is set to take a major jump against its Atlantic rival should it be capable of harping on yesterday’s hawkish rate announcement.
As for today, the euro zone will be publishing a handful of industrial production and manufacturing data alongside Britain. Most investors appear keen to push bearish on the region considering the damage a Greek default would wreak for the already-present debt woes. The US dollar doesn’t appear poised to capture significant gains against its Atlantic rivals, but a failure by Europe to capitalize on a potential rate increase in the near future could have regional values pushed lower by a resurgent dollar.
JPY – Investors Consider Risk Appetite Following ECB Rate Statement
The USD/JPY was seen trading somewhat higher this morning, holding steady near 80.40 at today’s opening Asian sessions. Market news released out of Europe today will likely be the driving force behind forex market values and traders would be wise to watch the repercussions of yesterday’s rate statement by the European Central Bank (ECB). The semi-hawkish statement by the ECB hinted at an imminent rate increase, but investors appeared underwhelmed and largely moving towards the safety of the US dollar.
The Japanese yen has been trading recently with largely positive results since Friday as investors turn their focus towards news out of the euro zone. After a week of ups and downs, the Japanese yen appears set to make gains today as investors largely flee risk after yesterday’s rate statements in Europe and Britain.
Oil – Saudi Arabia in Focus after OPEC’s Failure to Lift Production Targets
The price of Crude Oil ended yesterday much higher as traders largely began to anticipate a shortfall in supply in the coming months. A breakdown in talks between OPEC members in Vienna this week generated tension among oil speculators who were anticipating a rapid response to rising oil prices and global demand. The result has been a sudden climb in oil prices since Tuesday, reaching upwards of $102 a barrel as of this morning.
The sudden jump in the value of the US dollar yesterday should have helped halt this sudden rise in oil prices, but the force of global markets speculating a shortfall in production superceded this pressure. The OPEC spat, however, has made the investment environment around oil even less clear. Without some sign of production output agreement by OPEC, many are turning to Saudi Arabia for hints at a unilateral increase to sate global appetite. All eyes are on the Arabian oil giant ahead of this week’s close.
Technical News
EUR/USD
The current rally has helped the pair climb above the 61.8% Fibonacci retracement level from the May downtrend at 1.4570. While monthly stochastics are beginning to roll over, both the weekly and the daily stochastics are moving sharply higher. The pair could continue to rise where it may encounter resistance off of the previous trend line from the January to May rally which comes in at 1.4750. This level has additional significance as it coincides with the late April/early May lows. Further strength would test the May high at 1.4940. Initial support is found at 1.4550 while any pullback could find support at 1.4420, the 38% retracement from the May to June move higher. The 50-day moving average also hovers in this area. A deeper move could extend to 1.4330-00.
GBP/USD
Sterling is showing a few signs of weakness versus the dollar as daily stochastics are declining and a failed attempt to close the previous week above the 1.6515 resistance level. The pair is trading in a triangle consolidation pattern with resistance at 1.644. A move higher would then test the April high at 1.6745. To the downside support from the consolidation pattern is located at 1.6360. The 20-day moving average may prove to be supportive at 1.6320 as well as the trend line rising from the May 2010 low which comes in at 1.6180. A breach here would expose the May 2011 low at 1.6055.
USD/JPY
Yen strength has reemerged and the pair looks to test its post-intervention lows from early May at 79.56. A break of this level exposes the pre-intervention low at 76.11 as the charts are absent of any significant support levels. To the upside, 81.75 should see some resistance followed by the May high at 82.15.
USD/CHF
A new week and a new high for the Swiss franc as the USD/CHF traded as low as 0.8326. Falling stochastics on the weekly chart point to further potential declines in the pair. Traders may find opportunities to enter into the downtrend on a pullback in the pair. Support is located at the May low of 0.8550 followed by the falling trend line off of the February high at 0.8750.
The Wild Card
Oil
Spot crude oil prices are testing the upper boundary of a triangle consolidation pattern and today’s resistance comes in at $102.80. Measured from the chart pattern, a breakout higher could be worth an additional $10 a barrel. forex traders will want to eye key resistance levels at $105.25 and $110.75. To the downside support is found at the lower boundary of the triangle pattern at $97.30.
Written by Forexyard.com