The euro saw some steady gains in trading yesterday, as news was released that the IMF would increase its lending capacity in order to limit the effects of the euro-zone debt crisis. While the news helped boost riskier currencies, analysts were quick to warn that there are still plenty of unknowns with regards to the European crisis that could still sink the common currency lower.
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 | 1.2955 | 1.5517 | 77.23 | 0.9539 | 1.0443 | 0.8369 |
| 1.2897 | 1.5452 | 77.07 | 0.9484 | 1.0361 | 0.8338 | |
| 1.2848 | 1.5413 | 76.97 | 0.9449 | 1.0312 | 0.8303 | |
| Support | 1.2809 | 1.5380 | 76.89 | 0.9394 | 1.0271 | 0.8287 |
| 1.2721 | 1.5309 | 76.71 | 0.9359 | 1.0230 | 0.8268 | |
| 1.2642 | 1.5244 | 76.55 | 0.9304 | 1.0181 | 0.8237 |
Economic News
USD – USD Weakens Amid Risk Taking
The US dollar took some losses against the majors yesterday, following news that the IMF would expand lending to help stave off the negative effects of the euro-zone debt crisis. As a result of the news, increased risk taking dominated market sentiment, causing the safe-haven dollar to retreat during the afternoon session. The EUR/USD rose well above the 1.2800 level before stabilizing, while the GBP/USD rose toward the 1.5400 level.
Turning to today, a batch of US data is likely to influence USD pairs. Specific attention should be given to the Building Permit, Core CPI and Unemployment Claims figures, all set to be released at 13:30 GMT. The indicators are all forecasted to show some growth in the US economy, which if true, may give the USD a boost against some of its safe-haven rivals. Additionally, traders will want to watch out for any news out of the euro-zone which always has the potential to greatly impact all currency pairs, the EUR/USD in particular.
EUR – Possible Deal on Greek Debt Helps Euro
The euro received a positive boost during yesterday’s session, as news that Greece may be close to a deal on its debt led to risk taking among traders. Additionally, the IMF proposal to increase its lending capacity helped riskier currencies like the euro throughout the day. That being said, the euro’s gains were not so significant to signal a change in its long term bearish trend. The euro-zone’s problems still far outweigh any positive news, and analysts maintain that a real reversal for the common currency is still nowhere in sight.
Turning to today, traders will want to pay attention to any announcements out of the euro-zone, especially regarding a deal on Greek debt. Positive news may be able to help the euro extend yesterday’s gains. At the same time, the threat of Greece defaulting on its debt is still a very real possibility. Should such an event take place, the euro will likely tumble as a result. Traders will also want to note the results of a batch of US news scheduled to be released later in the day. Positive figures may lead to more risk taking which could boost the euro.
JPY – JPY Reverses Recent Gains amid Positive Euro-Zone News
News out of the euro-zone yesterday led to traders shifting their funds toward riskier currencies at the expense of the safe-haven Japanese yen. The JPY took losses against the euro and New Zealand dollar as a result. Meanwhile, positive US data released yesterday caused the USD/JPY pair to spike. Whether this news will impact any possible future Bank of Japan (BOJ) currency intervention is still unknown. The BOJ has been known to intervene in the marketplace to limit yen growth. With the currency currently in the middle of an extended bullish trend against the euro, rumors of the BOJ intervening have been circulating.
Today, traders will want to pay attention to any news out of the euro-zone which could impact the markets. Specifically, any positive news on Greek debt may cause the yen to extend yesterday’s bearish run. Additionally, traders will want to note any news out of the Bank of Japan which could indicate any future intervention in the currency market.
Crude Oil – Oil Prices Remain High Following Positive Euro-Zone News
The price of crude oil jumped to the $102 a barrel level yesterday, as the combination of positive euro-zone news and continued Middle East tensions helped support the commodity. Crude prices typically increases along with the euro, as the commodity becomes more attractive to international buyers when the dollar is weak.
Threatened sanctions against Iran over its nuclear program have also helped keep oil above the psychologically significant $100 a barrel level. With Iran controlling a substantial amount of the world’s oil, a possible military conflict has led to supply side fears.
Today, the price of oil will likely be determined by euro movements. Further positive news could help boost the commodity above the $102 level. At the same time, with so many unknowns still present in the euro-zone crisis, determining the trend for oil is growing increasingly more complicated.
Technical News
EUR/USD
Most technical indicators are showing this pair trading in neutral territory. The daily chart’s Relative Strength Index is currently around the 40 level, while the Williams Percent Range is at -60. As the data is inconclusive at the moment, traders are advised to take a wait and see approach for this pair.
GBP/USD
Technical indicators are providing mixed signals for this pair at the moment. The daily chart’s Stochastic Slow is in neutral territory, while the Relative Strength Index on the same chart has just drifted into the oversold zone. Traders will want to take a wait and see approach for this pair, while keeping in mind that an upward correction may take place.
USD/JPY
The Bollinger Bands on the daily chart appear to be tightening, indicating that a price shift is likely to occur in the near future. That being said, other technical indicators are inconclusive as to which direction the movement will be. Traders will want to keep an eye on the Relative Strength Index on the daily chart for possible clues as to whether the correction will be bullish or bearish.
USD/CHF
The Stochastic Slow on the 8-hour chart is currently forming a bullish cross, indicating that upward movement could occur in the near future. This theory is supported by the Williams Percent Range on the same chart, which has drifted into oversold territory. Traders may want to go long in their positions.
The Wild Card
NZD/CHF
After several days of continuous upward movement, technical indicators are signaling that this pair could see a downward correction in the near future. The Relative Strength Index on the daily chart is in overbought territory while the Stochastic Slow on the same chart is forming a bearish cross. Forex traders may want to go short in their positions ahead of the possible downward breach.
Written by Forexyard.com