US housing data beat expectations yesterday, as the Office of Federal Housing Enterprise Oversight (OFHEO) released an assessment showing homes that were mortgaged by Fannie Mae and Freddie Mac saw a rise in value of approximately 0.8% this past month. The report came one day after the National Association of Realtors published the existing home sales data that also met growth forecasts. The numbers may prove a turning point in the US housing market if growth can continue along this trajectory.
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 | 1.4578 | 1.6535 | 80.96 | 0.8571 | 1.0766 | 0.9122 |
| 1.4478 | 1.6333 | 80.59 | 0.8479 | 1.0681 | 0.9016 | |
| 1.4414 | 1.6201 | 80.43 | 0.8433 | 1.0628 | 0.8972 | |
| Support | 1.4314 | 1.5999 | 80.06 | 0.8341 | 1.0543 | 0.8865 |
| 1.4277 | 1.5928 | 79.85 | 0.8294 | 1.0511 | 0.8802 | |
| 1.4176 | 1.5725 | 79.48 | 0.8201 | 1.0426 | 0.8695 |
Economic News
USD – Dollar Flat after Fed Held Rates Steady
The US dollar was seen trading flat late yesterday as traders began to seek riskier assets after the Federal Reserve released its rate statement, hinting at no future economic stimulus or monetary policy tightening. The EUR/USD was seen moving sideways along the 1.4450 support line yesterday as a result. Analysts expect the USD to see further downside as interest rate differentials between the US and Europe comes back into view.
On a different note, US housing data beat expectations yesterday, as the Office of Federal Housing Enterprise Oversight (OFHEO) released an assessment showing homes that were mortgaged by Fannie Mae and Freddie Mac saw a rise in value of approximately 0.8%. The report came one day after the National Association of Realtors published the existing home sales data that also met growth forecasts. The numbers may prove a turning point in the US housing market if growth can continue along this trajectory.
With another heavy news day expected today, traders are sure to see heightened volatility. Most significantly, the US will be publishing more housing info that could help strengthen the trend seen these past two days. The weekly unemployment claims report will also get released this afternoon alongside the natural gas storage report. Given recent events, many traders appear to be favoring short positions on the greenback.
EUR – EUR Traders Assessing Situation in Greece
The euro has been experiencing mixed results following yesterday’s rate statement by the US Federal Reserve. Despite a dovish report suggesting a lingering low interest rate in the US, traders appeared more concerned with the potential Greece implosion as its economy struggles to make steps to secure another installment of its financial bailout. The vote of confidence for the government of Greece was just another episode in the saga, but one which may prove pivotal in the weeks ahead.
While debt concerns loom in the euro zone, the higher yielding assets like the GBP and EUR still appear positioned to gain value as traders choose between debt worries and interest rate differentials. The growth in risk appetite may have many investors choosing the latter as their gauge of direction.
As for Thursday, the euro looks to be anticipating mixed results against the other major currencies with mild bias to the upside. The euro zone will be publishing a spattering of economic events on today’s calendar. Traders should try and follow the serial release of manufacturing and service data out of France, Germany and the broader region. These numbers may give an indication for how well the region will fare in the second quarter.
AUD – AUD Trading Higher after Greece PM Wins Vote
The Australian dollar (AUD) was seen trading higher versus most other currencies yesterday after news began to shift many traders back into riskier assets. The Aussie has been a top performer these past several months considering many traders bank on a strengthening of the AUD due to a rise in Chinese demand for Australian raw materials.
Helping to assist the AUD’s recent rise was the vote of confidence in Greece Tuesday evening. With news that the euro zone may soon tackle its debt woes more effectively, higher yielding assets are gaining ground, the Aussie chief among them. Moves toward riskier currencies tend to favor the high growth economies like Australia, China and India. With this morning’s publication of the Australian Conference Board’s (CB) leading index, traders may get another injection of good news that could lift the AUD even further.
Oil – Crude Oil Price Finds Support at $92.50
Crude Oil prices rose mildly after finding support near the $92.50 price mark Wednesday as sentiment appeared to favor a shift back into riskier assets and commodities. Interest rate differentials have come back into play and this has so far led several large investors and analysts to consider a shift back into the EUR and physical assets instead of the USD.
As investors sought risk, the value of crude oil, which has been seen plummeting all week, rose to a weekly high of $93.45 a barrel. A sudden dip in dollar values due to this week’s risk sensitive environment has helped many investors move hesitantly back into assets like oil. Should Crude Oil sentiment hold steady this week, oil prices may continue to make gains, possibly reaching back towards $95 by Friday.
Technical News
EUR/USD
Last week’s failure of the pair to close below the 100-day moving average should not dismay euro shorts. The late in the week rally failed to move above the 20-day moving average which may induce some traders to sell into any euro gains. Both monthly and weekly stochastics have turned lower and point to potential declines. Support is found at 1.4075 followed by the May low at 1.3970. The 200-day moving average may be a likely target and below that the rising trend line from the May 2010 low comes in this week at 1.3610. Resistance is found at Friday’s high of 1.4340 followed by 1.4500 and the early June high of 1.4690.
GBP/USD
Cable is on the verge of breaking the neckline of a head and shoulders top which comes in today at 1.6120. A breach at this level and a measured move from the chart pattern could take the GBP/USD lower to 1.5370. The likeliest target on the charts is the December low at 1.5350. On the way lower cable could encounter support at the May low of 1.6050 and the March low at 1.5940. To the upside the pair may see resistance at last week’s high at 1.6440 as well as 1.6550 off of the May high.
USD/JPY
The pair failed to establish a beachhead above the 81 yen level and proceeded to fall. This level will serve as initial resistance followed by the May 31st high at 81.75 followed by 82.20 and 82.57. Falling daily stochastics hint at further declines. Support comes in at the May low of 79.50 followed by the all-time low at 76.11.
USD/CHF
The USD/CHF rose to the May support which has turned into a resistance level at 0.8550, a phenomenon which often occurs in technical analysis. A break higher would run into the 50-day moving average which coincides with the falling trend line off of the February high at 0.8640. This may offer traders a good level to enter short into the long term downtrend. Additional resistance is located at the mid-May low at 0.8750 and the May high of 0.8950. To the downside the all-time low could be supportive at 0.8325.
The Wild Card
Gold
Yesterday spot gold prices attempted to move above the $1,553 resistance but failed to hold the gains before falling back to the opening day price. Yesterday’s commitment by the Federal Reserve to keep US interest rates at exceptionally low levels for an extended period may offer more upside potential for the commodity. Forex traders should look for a break of the short term resistance to test the all-time high at $1,576. Support for spot gold prices are found at the rising trend line from the late January low which comes in today at $1,528, followed by additional support at $1,5150.
Written by Forexyard.com