Concerns over the euro-zone debt crisis pushed the common currency to new lows yesterday during the first trading day of 2012. The EUR/JPY fell as low as 98.71, a 10-year low for the pair. Today, traders will want to pay attention to several leading indicators which are likely to inject some volatility into the marketplace.
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 | 1.3118 | 1.5726 | 77.63 | 0.9469 | 1.0399 | 0.8455 |
| 1.3057 | 1.5638 | 77.46 | 0.9417 | 1.0355 | 0.8408 | |
| 1.2986 | 1.5568 | 77.19 | 0.9375 | 1.0299 | 0.8384 | |
| Support | 1.2952 | 1.5498 | 76.76 | 0.9332 | 1.0214 | 0.8341 |
| 1.2918 | 1.5445 | 76.45 | 0.9300 | 1.0157 | 0.8328 | |
| 1.2857 | 1.5357 | 76.01 | 0.9248 | 1.0064 | 0.8304 |
Economic News
USD – Non-Farm Payrolls Set to Impact USD this Week.
With most markets closed on Monday, the USD started off the week showing very little movement against its main currency rivals. That is all set to change as a series of leading indicators are set to be released throughout the week, concluding with the Non-Farm payrolls figure on Friday. The Non-Farm figure is considered one of the most critical economic indicators, and it is guaranteed to inject significant volatility across the marketplace.
Turning to today, dollar traders will want to pay particular attention to the US ISM Manufacturing PMI. Analysts are predicting this month’s PMI to come in higher than December’s figure. If true, the USD may be able to extend its bullish trend against the euro. At the same time, traders will want to brace themselves in case of a poor US Manufacturing PMI. While the US has reported some solid economic growth in recent weeks, the manufacturing industry is still very fragile. A low figure may bring the dollar down by this afternoon.
EUR – Italian Debt Worries Continue to Bring EUR Down
The euro started off 2012 on a bearish note, as the currency hit a 10-year low against the Japanese yen. The EUR/JPY pair reached as low as 98.71 in trading yesterday, as investors are still preoccupied with the euro-zone debt crisis. In particular, Italian debt has dominated the headlines. Analysts are predicting this year may be harder on the euro then 2011. If so, the euro is unlikely to rebound in the near future.
Turning to today, traders will want to pay attention to any news coming out of the euro-zone regarding sovereign debt and austerity talks. The EU is hoping to give investors some confidence in the common currency. Positive news may give the EUR a modest bump following yesterday’s losses.
If we take a look at the rest of the week, the US Non-Farm Payrolls figure is set to create major market volatility. Traders would be mistaken if they thought that this figure only impacted the greenback. The US employment number tends to affect all currencies, including the euro. A solid result may generate some risk appetite in the marketplace, which is likely to benefit the euro in the long run.
JPY – Yen Makes Huge Gains against Euro
The yen was able to maintain its recent bullish trend against the euro in trading yesterday, as the EUR/JPY pair dropped to a 10-year low. Investors are reverting to the safe-haven yen as the euro-zone debt crisis stays in the news. Further problems in the euro-zone may bring the pair even lower.
Traders will want to pay attention to any comments from the Bank of Japan regarding the yen’s current high levels. Japan’s economy is largely based on exports, meaning that a solid yen does not work in the country’s favour. The BOJ has been known to inject capital into the marketplace to influence the value of the yen in the past. If they decide to do so once again, the JPY may turn bearish very quickly.
Crude Oil – Crude Oil Falls amid Euro-Zone Debt Worries
The price of crude oil fell last week, as continued worries over the euro-zone debt crisis combined with troubling news out of the Middle East helped scare off investors. The commodity has dropped well below the $100 a barrel level and analysts are warning that the trend may continue this week.
Today, traders will want to pay close attention to any news out of the Middle East, and particularly Iran. The country has recently threatened to cut off oil exports. Any further indications that they will do so will likely drive prices down further.
Technical News
EUR/USD
Technical indicators are showing that the pair may see an upward correction this week. The Relative Strength Index on the weekly chart has entered the oversold region, while the Stochastic Slow on the same chart has formed a bullish trend. Taking a bullish long term trend may be a wise choice.
GBP/USD
Most long term indicators show this pair trading in neutral territory, meaning that major market movements are not expected this week. That being said, the Williams Percent Range on the weekly chart is creeping toward the oversold region. Should the indicator fall below the -90 level, it may be a sign for traders to go long in their positions.
USD/JPY
Following the bearish trend late last week, technical indicators are showing that the USD/JPY may be due for an upward correction this week. Daily chart indicators, like the Relative Strength Index and Stochastic Slow, are showing the pair in the oversold region. Going long this week may be a wise strategy for the pair.
USD/CHF
Following the slight upward movement the USD/CHF experienced last week, technical indicators are showing that the pair may turn bearish in the coming days. The Williams Percent Range on the daily chart is creeping toward the -20 level. Should it go above this level, it may be a sign that the pair will stage a downward correction. Traders will want to keep an eye on the daily and weekly chart for further signs of bearish movement.
The Wild Card
AUD/USD
The AUD/USD pair has been trading in overbought territory for some time now, and technical indicators are showing that it may finally be due for a downward correction. Both the Relative Strength Index and the Williams Percent Range on the daily chart have entered the overbought zone. Forex traders may want to go short in their positions today as a result.
Written by Forexyard.com