The euro had a bullish day yesterday, after news was released that Greece had reached an austerity deal led to a spike in risk taking. The EUR/USD spent much of the day at or above the 1.3300 level after dropping to 1.3220 a day earlier. Today, traders will want to continue monitoring any announcements out of the euro-zone as they are likely to give clues as to where the markets will be heading. In addition, trade balance reports from both the US and Canada are likely to generate market volatility.
Forex Market Trends
| EUR/USD | GBP/USD | USD/JPY | USD/CHF | AUD/USD | EUR/GBP | |
| Daily Trend |  |
|
 |
|
|
|
| Weekly Trend | |
|
|
|
|
|
| Resistance | 1.3316 | 1.5878 | 78.08 | 0.9256 | 1.0841 | 0.8420 |
| 1.3266 | 1.5837 | 77.84 | 0.9217 | 1.0772 | 0.8389 | |
| 1.3235 | 1.5811 | 77.68 | 0.9192 | 1.0729 | 0.8370 | |
| Support | 1.3187 | 1.5785 | 77.43 | 0.9152 | 1.0660 | 0.8355 |
| 1.3156 | 1.5753 | 77.27 | 0.9127 | 1.0617 | 0.8321 | |
| 1.3106 | 1.5700 | 77.01 | 0.9077 | 1.0549 | 0.8291 |
Economic News
USD – USD Retreats vs. Riskier Currencies, Sees Gains against JPY
The US dollar saw a mixed trading day yesterday, as positive news boosted risk taking in the marketplace which led to gains for currencies like the euro and British pound. News that the Bank of England will inject an additional 50 billion pounds to support the economic recovery, combined with word that Greece had finally reached an austerity deal, caused investors to shift their funds away from safe-havens. As a result, the EUR/USD spent much of the day hovering around the 1.3300 level, an increase of almost 100 pips from a day earlier.
While the greenback dropped against riskier currencies, it was able to extend its gains against the Japanese yen following the release of a better than expected US Unemployment Claims figure. The figure showed that 358K people claimed first time unemployment benefits in the US last week. That number was substantially lower than the anticipated 369K, and was seen as further proof that the US economy was moving ahead with its recovery. The USD/JPY reached as high as 77.34 after the news was released, before staging a slight downward reversal.
Turning to today, traders will want to continue paying attention to any news out of the euro-zone, which could lead to an increase in risk taking. In addition, the UK PPI Input figure at 09:30 GMT, followed by Trade Balance reports from the US and Canada at 13:30 GMT, are likely to generate heavy trading to close out the week. Should any of the economic indicators come in above expectations, the dollar is likely to extend its losses against the European currencies.
EUR – EUR Bullish Following Greek News
The euro spent much of the day yesterday in an uptrend, as positive British and Greek news brought an increase in risk taking during the European session. The widely anticipated move that the Bank of England would increase its Asset Purchase Facility by 50 billion pounds was met positively by investors, who helped lift both the GBP and EUR against safe-haven currencies like the USD and JPY.
That trend continued during the second half of the day, following news that Greece had reached an austerity agreement which helps pave the way for the country to receive a second bailout and potentially avoid default. While the news continued to help the euro, analysts were quick to warn that Greece was still in a fragile state, and that the euro’s gains may be short lived.
Turning to today, traders will want to continue monitoring any announcements out of the euro-zone. Positive news could help the common currency extend its recent gains. Additionally, traders will want to watch the British PPI Input, set to be released at 09:30 GMT. Analysts are forecasting that the indicator will come in at 0.4%, which if true, could help the euro close out the week on a positive note.
JPY – Yen Remains Bearish in High Volatility Day
The Japanese yen had a largely bearish day yesterday, after positive European and US news led to an increase in risk taking and boosted higher yielding assets. The EUR/JPY moved up close to 100 pips by the evening session and approached the 103.00 level. The USD/JPY spent a good part of the day floating close to the 77.35 level, up close to 30 pips during the European session.
Turning to today, yen values are likely to be determined by euro-zone and British news. Any positive euro-zone developments, particularly with regards to the possible Greek bailout, could lead to further losses for the yen.
Crude Oil – Crude See Steady Uptick in Price amid Risk Taking
Optimism that Greece would soon receive a second bailout package led to an increase in risk taking during yesterday’s trading session. The news led to gains for the euro, which in turn boosted commodities, like crude oil. The price of oil often times goes up when there is a bullish euro, as the commodity becomes cheaper for international buyers. Crude spent much of the day yesterday hovering around the $100 a barrel level, up over $2 from the morning session.
Tomorrow, oil may be able to maintain its gains, providing additional positive euro-zone news is released. Traders will also want to continue monitoring the situation in Iran, as any further escalation in the conflict could cause the price of crude to go up further.
Technical News
EUR/USD
Long term technical indicators are showing that this pair is range trading, meaning that major market movements are not forecasted at this time. The one exception is the Williams Percent Range on the daily chart, which is currently in overbought territory. Traders will want to keep an eye on the daily chart for indications of a possible downward correction.
GBP/USD
Both the Relative Strength Index and Williams Percent Range on the daily chart show this pair in overbought territory, meaning that a bearish correction could take place in the near future. Traders may want to open short positions ahead of a downward breach.
USD/JPY
Most technical indicators show this pair trading in neutral territory, meaning that no major movements are forecasted for the near future. The one exception is the Stochastic Slow on the daily chart, which has formed a bearish cross. Traders will want to take a wait and see approach for this pair, as a clearer picture may present itself later on.
USD/CHF
The Bollinger Bands on the daily chart are narrowing, indicating that a major price shift may occur in the near term. The Williams Percent Range on the same chart is currently in oversold territory, which can be taken as a sign that the shift will likely be bullish. Traders may want to go long in their positions.
The Wild Card
CAD/JPY
After seeing steady gains over the last few days, technical indicators are now showing that this pair could see a downward correction in the near future. The Stochastic Slow on the daily chart has formed a bearish cross, while the Williams Percent Range is in overbought territory. Forex traders may want to go short in their positions today.
Written by Forexyard.com