The euro took a strongly bearish turn to close out last week, after hitting a two month high against the dollar on Thursday. The downward correction was largely attributed to fresh concerns that Greece may not get a sorely needed bailout it needs to avoid defaulting on its debt. Greek news is once again likely to dominate market sentiment this week. Traders will want to pay particular attention to a meeting on Wednesday of euro-zone finance ministers. Any announcements regarding Greece following the meeting could lead to major 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 | 1.3318 | 1.5926 | 78.08 | 0.9260 | 1.0839 | 0.8407 |
| 1.3266 | 1.5878 | 77.83 | 0.9219 | 1.0771 | 0.8373 | |
| 1.3235 | 1.5849 | 77.67 | 0.9194 | 1.0729 | 0.8352 | |
| Support | 1.3186 | 1.5804 | 77.41 | 0.9154 | 1.0661 | 0.8318 |
| 1.3155 | 1.5775 | 77.25 | 0.9129 | 1.0618 | 0.8297 | |
| 1.3105 | 1.5729 | 76.99 | 0.9088 | 1.0550 | 0.8263 |
Economic News
USD – Risk Aversion Leads to a Bullish Dollar
The US dollar saw gains virtually across the board to close out last week, following negative euro-zone news that caused investors to shift their funds to safe-haven assets like the greenback. The EUR/USD closed Friday’s session at 1.3196, well below the two-month high of 1.3321 the pair reached on Thursday. Against the Japanese yen, the dollar largely maintained its upward momentum, and was able to close out the week at 77.61. Analysts attributed the USD/JPY’s recent uptrend to positive employment data out of the US that has bolstered confidence in the economic recovery.
Turning to this week, traders will want to continue monitoring the situation in Greece for clues as to where the market is heading. Last week’s news cast doubts on whether Greece will qualify for a second bailout package it needs to avoid defaulting on its debt. While analysts are still confident that a bailout will be secured, they are quick to warn that the euro is still in a very fragile position. The dollar may see further upward movement if any additional negative Greek news is released in the coming days.
Additionally, a batch of US economic indicators set to be released throughout the week may influence dollar pairs. Tuesday’s Retail and Core Retail Sales figures, Wednesday’s TIC Long-Term Purchases and Thursday’s weekly Unemployment Claims will further illustrate the current state of the US economy. Positive news may benefit the USD against its main rivals, the EUR, GBP and JPY.
EUR – Euro Unable to Maintain Upward Momentum, Closes Week on a Bearish Note
Following Thursday’s news that Greece reached a deal on an austerity package that would pave the way for a bailout, the euro shot up to a two-month high against the US dollar. That trend drastically reversed itself on Friday, as the combination of demands for additional spending cuts in Greece, as well as political disagreements in that country cast doubts on whether a bailout will be delivered. The EUR/USD closed out the week at 1.3196. Against the Japanese yen, the common currency dropped almost 100 pips on Friday before staging a slight correction. The EUR/JPY pair closed the week at 102.42.
This week, traders will want to closely monitor any developments regarding the current Greek crisis. Particular attention should be given to a meeting of euro-zone finance ministers on Wednesday, which will likely shed some light on the state of current talks to deliver the bailout package to Greece. Most analysts are predicting that Greece will eventually receive the bailout it needs in order to avoid default. The euro may see some upward movement, if and when, the bailout package is agreed upon, but traders should be warned that the possibility for further euro bearishness is still very real.
AUD – Aussie Comes off Recent Highs
The Australian dollar saw some bearish movement to close out last week. The currency moved down against most of its major currency rivals, following negative euro-zone news that drove investors away from riskier assets. The AUD/USD closed Friday’s session at 1.0671, well below the six-month high it reached earlier in the week. Against the Swiss franc, the AUD closed Friday at 0.9776, down over 100 pips from earlier in the week.
This week, Aussie movements will likely be determined by euro-zone news. Providing a Greek bailout agreement is agreed to in the coming days, the AUD could see a boost along with other riskier assets. That being said, any further negative news could drive investors back to safe-havens which may cause the AUD to drop further.
Crude Oil – Greek Concerns Weigh Down on Oil
Renewed fears that Greece could default on its debt weighed down on riskier currencies and commodities, like crude oil, during trading late last week. Commodities like oil often go down in price when they become less affordable to international buyers. Crude closed out the week at $98.99 a barrel, almost a full dollar below where it was trading during Thursday’s session.
This week, in addition to following the ongoing developments in the euro-zone, oil traders will also want to watch fundamental indicators out of the US. Some risk taking might return to the market if any of the US fundamentals show growth in the US economy. The news could signal increased American demand in for oil, which may help boost prices.
Technical News
EUR/USD
The weekly chart’s Stochastic Slow is currently forming a bearish cross, indicating that downward movement could occur for this pair in the near future. This theory is supported by the daily chart’s Williams Percent Range, which is hovering close to the overbought zone. Traders may want to go short in their positions.
GBP/USD
A bearish cross on the weekly chart’s Stochastic Slow indicates that downward movement may occur in the coming days. That being said, most other long-term technical indicators show that this pair is range trading at the moment. Traders may want to take a wait-and-see approach, as a clearer picture may present itself later in the week.
USD/JPY
Most technical indicators on the daily chart show that this pair is overbought and could see a downward correction in the near future. These include the Relative Strength Index, which has cross above 70, and the Williams Percent Range, which is at -10. Going short may be the preferred strategy for this pair.
USD/CHF
The daily chart’s MACD/OsMA has formed a bullish cross, which typically means that upward movement could occur in the near future. This theory is supported by the Stochastic Slow on the weekly chart. Traders may want to go long in their positions for this pair.
The Wild Card
GBP/CHF
The daily chart’s Stochastic Slow has formed a bullish cross, indicating that upward movement could occur in the near future. This theory is supported by the Relative Strength Index on the 8-hour chart, which has crossed into oversold territory. Forex traders may want to go long in their positions ahead of a possible upward breach.
Written by Forexyard.com