The USD/JPY hit a fresh 3-month low today, as worse than expected news out of the US continued to weigh down on the pair. Rumors have begun circulating that the Bank of Japan (BOJ) may soon intervene in the currency market to limit yen growth. Today, traders will want to once again monitor US economic indicators. Specifically, the weekly US Unemployment Claims figure and a testimony from the Fed Chairman are likely to create market volatility.
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 | 1.3255 | 1.5930 | 76.95 | 0.9230 | 1.0800 | 0.8395 |
| 1.3235 | 1.5910 | 76.75 | 0.9210 | 1.0780 | 0.8375 | |
| 1.3205 | 1.5880 | 76.45 | 0.9180 | 1.0760 | 0.8345 | |
| Support | 1.3145 | 1.5820 | 75.85 | 0.9120 | 1.0700 | 0.8285 |
| 1.3115 | 1.5790 | 75.55 | 0.9090 | 1.0670 | 0.8255 | |
| 1.3095 | 1.5770 | 75.35 | 0.9070 | 1.0650 | 0.8235 |
Economic News
USD – Dollar Continues to Tumble against Main Currency Rivals
The combination of better than expected euro-zone news and a poor US ADP Non-Farm Employment Change figure caused the USD to extend its bearish trend throughout the day yesterday. The EUR/USD shot up well over 100 pips during the European trading session, and once again broke the 1.3200 level before staging a slight downward correction. Meanwhile the USD/JPY hit a fresh three-month low earlier in the day. Rumors began to circulate that the Bank of Japan would soon intervene in the market place after the pair dropped as low as 76.02 earlier in the day.
Turning to today, a speech from Fed Chairman Bernanke is likely to generate significant market volatility. Following the last speech from the Fed Chairman the dollar took heavy losses against its main currency rivals. While it is not yet known what Bernanke will say, the dollar may fall further unless he is able to boost investor confidence in the US economic recovery.
Traders will also want to remember that the all important US Non-Farm Payrolls figure is set to be released on Friday. The indicator is widely considered to be the most important news event on the economic calendar, and large shifts in the market place are guaranteed to occur. The USD may come under renewed pressure if the payrolls figure comes in below expectations.
EUR – Positive Euro-Zone Data Boosts Common Currency
Positive euro-zone manufacturing data, combined with fresh hopes that Greece will soon come to a debt swap agreement with its creditors, boosted risk taking in the markets yesterday. The euro saw gains across the board as a result, and the EUR/USD once again crossed the psychologically significant 1.3200 level. The EUR/JPY, which had only recently hit record lows, jumped over 100 pips over the course of the day.
In addition to any announcements out of the euro-zone today, traders will also want to pay attention to a batch of US news that is likely to generate market volatility. A speech from the US Fed Chairman at 15:00 GMT is likely to generate the biggest market movements. Any comments which reinforce the idea that the US economic recovery is stalling are likely to give the euro an additional boost ahead of the all important US Non-Farm Payrolls on Friday. Traders will also want to note the weekly US Unemployment Claims figure, as it is also likely to give clues as to the state of the US economy.
JPY – BOJ Intervention Possible after USD/JPY Drops to 3-Month Low
Investor concerns that the Bank of Japan (BOJ) would soon move in to influence the markets were reinforced yesterday, after the USD/JPY dropped to a fresh three-month low during European trading. The BOJ has been known to intervene when the yen gets too strong. The Japanese economy is largely export based, and a strong currency tends to have adverse effects on economic growth.
Turning to today, traders will want to pay attention to US news which is likely to impact the USD/JPY pair. Unless the news set to be released comes in better than expected, the greenback may continue to fall, in which case the possibility of a BOJ intervention may be more and more likely.
Gold – Gold Continues to Climb amid Increase in Risk Taking
Gold maintained its upward trend throughout the day yesterday, as positive euro-zone news led to an increase in risk taking in the market place. The precious metal touched the $1750 an ounce level before staging a mild correction later in the day.
Turning to today, the price of gold will largely be influenced by US news. Should the news result in further gains for the euro and other riskier currencies in late day trading, gold may be able to extend its recent bullish momentum. On the other hand, should US news come in better than expected, the dollar could see some gains which may cause gold to retreat to close out the week.
Technical News
EUR/USD
After steadily increasing in recent days, technical indicators are now showing that this pair may see a downward correction in the near future. The daily chart’s Williams Percent Range is currently at the -10 level, while the Relative Strength Index has drifted above 70. Going short may be the preferred strategy today.
GBP/USD
Technical indicators are showing that this pair is in overbought territory and could see a bearish correction shortly. A bearish cross has formed on the daily chart’s Stochastic Slow, while the Relative Strength Index on the same chart is well into the overbought zone. Going short could prove to be the wise choice.
USD/JPY
While a bullish cross has formed on the daily chart’s Stochastic Slow, indicating impending upward movement, the Relative Strength Index on the same chart is in neutral territory. Traders may want to take a wait and see approach for this pair, as a clearer trend may present itself later on.
USD/CHF
Technical indicators on the daily chart show this pair trading in oversold territory, which is typically a sign of impending upward movement. The Williams Percent Range has drifted below the -90 level, while the Relative Strength Index is at 20. Opening long positions may be the wise choice.
The Wild Card
AUD/CHF
The Bollinger Bands on the daily chart are narrowing, in a sign that a price shift could occur in the near future. The Stochastic Slow on the 8-hour chart has formed a bearish cross, meaning that the movement could be downward. Forex traders may want to take this opportunity to open short positions ahead of a possible downward breach.
Written by Forexyard.com