The euro was largely up during yesterday’s trading session, as positive global data led to risk taking among traders. A successful Spanish debt auction combined with a lower than forecasted US Unemployment Claims were largely responsible for the euro’s bullish trend. That being said, analysts are warning that the overall trend for the common currency is still down and that considerably better euro-zone news is needed before a meaningful reversal will take place.
Forex Market Trends
| EUR/USD | GBP/USD | USD/JPY | USD/CHF | AUD/USD | EUR/GBP | |
| Daily Trend |  |
|
|
 |
|
|
| Weekly Trend | |
|
|
|
|
|
| Resistance | 1.3112 | 1.5646 | 77.38 | 0.9505 | 1.0442 | 0.8421 |
| 1.3001 | 1.5552 | 77.20 | 0.9445 | 1.0358 | 0.8374 | |
| 1.2933 | 1.5493 | 77.07 | 0.9408 | 1.0293 | 0.8346 | |
| Support | 1.2876 | 1.5446 | 76.88 | 0.9378 | 1.0245 | 0.8323 |
| 1.2821 | 1.5399 | 76.75 | 0.9311 | 1.0198 | 0.8299 | |
| 1.2753 | 1.5341 | 76.58 | 0.9251 | 1.0136 | 0.8267 |
Economic News
USD – USD Gains vs. JPY Following Unemployment Report
The US dollar saw substantial gains against several of its main currency rivals yesterday, following a better than expected US Unemployment Claims figure. The weekly unemployment figure came in at an almost 4-year low and well below analysts earlier predictions. The news helped boost faith in the US economic recovery and turned the USD bullish against both the Japanese yen and Australian dollar.
The USD was not as fortunate against riskier currencies like the euro. The EUR/USD was trading above the 1.2900 level, following a successful Spanish debt auction. Risk appetite was also helped by gains on Wall Street and reports that the IMF is increasing its funding for countries adversely affected by the euro-zone debt crisis.
Turning to today, traders will want to pay attention to a British retail sales figure as well as US Home Sales data. Both are forecasted to come in above last month’s readings, which if true may help riskier currencies extend yesterday’s gains. In addition, any positive news out of the euro-zone, particularly regarding Greece’s ongoing debt talks may lead to further losses for the USD against the euro.
EUR – Increase in Risk Taking Boosts EUR
A positive Spanish debt auction sent the euro up against most of its safe-haven rivals, including the Japanese yen and US dollar. The EUR/JPY was trading above the 99.00 level for much of yesterday’s trading session. The pair, which only recently hit an 11-year low, has seen small but steady gains over the last several days. Meanwhile, the EUR/USD broke the 1.2900 level in trading yesterday, as renewed confidence in the global economic recovery led to an increase in risk taking.
Today, euro traders will want to watch out for any announcements out of the euro-zone, particularly with regards to Greek debt talks. Positive news will likely help the euro extend its recent gains. In addition, British Retail Sales and US Home Sales figures are likely to generate market volatility. With analysts predicting positive news for both indicators, the euro may maintain its current trend to close out the week.
CHF – CHF Continues to Gain Ground against US Dollar
The USD/CHF pair continued to fall throughout the day yesterday, as positive euro-zone news weakened demand for the safe-haven US dollar. The pair has fallen for the last four days, as European data continues to generate risk taking among traders. A better than expected US unemployment figure released yesterday did little to change the trend of the pair, as European news continues to determine market trends.
Turning to today, traders will want to keep an eye on economic indicators from both the UK and US. With both the British Retail Sales and US Existing Home Sales forecasted to come in significantly better than last month’s, the franc may maintain its current bullish trend to close out the week. At the same time, with the euro-zone as fragile as it is at the moment any negative data may cause traders to revert back to safe haven currencies like the USD, likely at the expense of the franc.
Crude Oil – Price of Oil Rises amid Supply Side Fears
Investor fears that Iran could close off a significant waterway used for oil shipments led to a spike in the price of oil in yesterday’s trading. Iran has threatened to close the Strait of Hormuz, the waterway used to supply about a fifth of the world’s oil, should the country’s security be endangered. The price of oil also moved up yesterday, as positive euro-zone news boosted commodities throughout the day. As a result, oil was close to $102 a barrel for much of the day.
Turning to today, oil will likely maintain its current trend given that no expected breakthrough is predicted to resolve the current tensions between Iran and the West. Traders will want to pay attention to any news out of the Middle East. Any escalation in the conflict with Iran could cause oil prices to spike as markets close for the week.
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
GBP/CAD
Technical indicators are placing this pair in oversold territory, meaning that an upward correction could occur before markets close for the week. The daily chart’s Williams Percent Range has dropped below the -80 level, while the Relative Strength Index on the same chart has drifted into the oversold zone. Forex traders may want to go long in their positions today.
Written by Forexyard.com