Following yesterday’s bullish run for the euro, the currency will attempt to extend its gains in trading today. Investor confidence in the euro steadily increased throughout the day yesterday, as details of a Greek deal to restructure its debt were released. Should confidence in the euro-zone recovery continue, the common currency may be able to prolong its bullish movement in the coming days.
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 | 1.3052 | 1.5664 | 77.30 | 0.9543 | 1.0564 | 0.8405 |
| 1.29557 | 1.5572 | 77.12 | 0.9475 | 1.0478 | 0.8341 | |
| 1.2893 | 1.5516 | 76.92 | 0.9393 | 1.0408 | 0.8321 | |
| Support | 1.2845 | 1.5425 | 76.83 | 0.9358 | 1.0342 | 0.8298 |
| 1.2798 | 1.5368 | 76.71 | 0.9314 | 1.0276 | 0.8269 | |
| 1.2739 | 1.5277 | 76.54 | 0.9244 | 1.0211 | 0.8237 |
Economic News
USD – Greenback Bearish Ahead of Fed Meeting
Following the losses the US dollar took during the European trading session yesterday, investors will be eagerly watching for news out of the two-day Federal Reserve Policy Meeting scheduled to start today. The USD started off the week on a bearish note following an increase in risk taking due to apparent signs of a euro-zone economic recovery. The trend brought the EUR/USD above the 1.3000 for the first time in nearly three-weeks, while the AUD/USD shot up over 100 pips over the course of the day.
Whether the greenback will maintain its downward trend for the rest of the week will largely be determined by the results of the Fed meeting. While the Federal Funds Rate is not expected to go up when the indicator is announced on Wednesday, investors will be watching the meeting closely for clues as to when US interest rates will go up. Should the Fed decide to maintain its current policy of record low interest rates for the near future, traders will likely take it as a sign that the US economy still has a long way to go toward full recovery. Such an event may lead to further losses for the greenback.
EUR – EUR Sees Broad Gains, but Sovereign Debt Fears Remain
Following the gains the euro saw against most of its main currency rivals yesterday, including the British pound, US dollar and Japanese yen, traders will once again by eyeing any news out of the euro-zone for signs regarding the economic recovery. Today, a batch of French and German manufacturing data is likely to offer clues as to the current state of two of Europe’s leading economies. With all indicators forecasted to show at least slight growth over the previous months, the euro may be able to maintain its current trend.
While the long-term outlook for the euro has improved, analysts are quick to warn that the sovereign-debt crisis that has hit much of the EU is far from over. Traders will also want to note that other international news is likely to impact the euro this week. The results of the two-day Federal Reserve meeting, scheduled to start today, will likely generate heavy volatility for the EUR/USD pair. Should the Fed release news that US interest rates will go up in the near future, the euro may see downward movement as a result.
JPY – Yen Takes Heavy Losses against EUR amid Increased Risk Taking
The EUR/JPY pair shot up yesterday, following an increase in risk taking after positive euro-zone news was released. In addition to a significant drop against the euro, the JPY also turned bearish against other riskier assets like the Australian and New Zealand dollars. At the same time, the JPY was able to maintain recent gains against fellow safe-haven currencies like the US dollar.
Turning to today, yen values will likely be determined by the results of a batch of euro-zone news. While the euro-zone recovery is still very fragile, traders seem to be taking every opportunity to shift their assets toward higher yielding currencies, often at the expense of the yen. Should today’s news reinforce the notion that the euro-zone is on its way to recovery, the yen may resume its bearish movement as a result.
Gold – Gold Continues to Move Up Based on Positive EU News
Gold was able to maintain the bullish momentum it started late last week, following the release of positive euro-zone data which boosted risk appetite among investors. Typically, commodities such as gold move up along with riskier, higher yielding currencies like the euro. While the precious metal is up at the moment, analysts are quick to warn that any negative euro-zone news would quickly bring it down.
Today, traders will want to pay attention to a batch of euro-zone news which is likely to affect commodity prices. Positive data is likely to cause gold to extend its current gains. Furthermore, should the Fed signal any positive growth in the US economy at the beginning of their planned two-day meeting, gold prices may increase as a result.
Technical News
EUR/USD
Long term technical indicators are showing this pair in oversold territory, meaning that an upward correction could take place in the coming days. The weekly chart’s Relative Strength Index is currently at 20, while the Williams Percent Range on the same chart has dropped below the -80 level. Going long may be a wise strategy for the pair.
GBP/USD
According to technical indicators on the daily chart, this pair has breached the overbought zone, and could see a downward correction in the near future. A bearish cross has formed on the Stochastic Slow and the Williams Percent Range has gone above -10. Traders may want to go short on this pair.
USD/JPY
Technical indicators on both the daily and weekly charts are showing this pair in neutral territory, meaning that no defined trend is apparent at this time. Traders may want to take a wait and see approach for the pair, as a clearer picture may present itself in the near future.
USD/CHF
The daily chart’s technical indicators are showing that following last week’s bearish movement, the USD/CHF may see an upward correction in the near future. The Stochastic Slow has formed a bullish cross, while the Williams Percent Range is hovering in the oversold zone. Going long may prove to be a wise choice.
The Wild Card
NZD/JPY
Following the recent bullish momentum this pair has experienced, technical indicators are now showing that a downward reversal could occur in the near future. The daily chart’s Relative Strength Index and Williams Percent Range are both in overbought territory, while the Stochastic Slow has formed a bearish cross. Forex traders may want to go short in their positions today.
Written by Forexyard.com