Fears that Greece could still default on its debt despite Monday’s approval of a bailout package led to risk aversion in the markets yesterday. The euro largely reversed earlier gains against both the USD and JPY as a result. Today, in addition to any euro-zone announcements regarding Greece, traders will want to pay attention to a batch of German and French manufacturing data. As the two largest economies in the euro-zone, indicators from Germany and France have the potential to impact the EUR.
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 | 1.3315 | 1.5870 | 80.85 | 0.9205 | 1.0750 | 0.8460 |
| 1.3295 | 1.5850 | 80.65 | 0.9185 | 1.0730 | 0.8440 | |
| 1.3265 | 1.5820 | 80.35 | 0.9155 | 1.0700 | 0.8410 | |
| Support | 1.3205 | 1.5760 | 79.75 | 0.9095 | 1.0640 | 0.8350 |
| 1.3175 | 1.5730 | 79.45 | 0.9065 | 1.0610 | 0.8320 | |
| 1.3155 | 1.5710 | 79.25 | 0.9045 | 1.0590 | 0.8300 |
Economic News
USD – Risk Aversion Leads to USD Gains
The USD was able to largely recoup the losses it took on Monday throughout yesterday’s trading session, as ongoing euro-zone worries led to risk aversion in the market place. The EUR/USD fell over 100 pips yesterday, to just below the 1.3200 level, before staging a mild upward correction. The AUD/USD also fell close to 100 pips yesterday. The pair has been unable to break the 1.0800 resistance level and has dropped as low as 1.0652. Meanwhile, against the Japanese yen, the dollar has managed to hang onto recent gains, but has been unable to break above the 79.90 level.
Turning to today, a lack of significant international news means that any announcements out of the euro-zone will largely decide risk appetite. Investors are still skeptical of Greece’s chances of avoiding a debt default. Furthermore, there has been increased talk as of late about whether Greece will be able to remain in the euro-zone. Any further indication that the Greek crisis will persist may result in safe-haven currencies, like the greenback, extending their recent gains.
Later in the week, dollar traders will want to pay attention to several US indicators, including the Unemployment Claims and New Home Sales figures. Both are considered valid signs of how the US economic recovery is proceeding and have the potential to generate significant market volatility when they are released.
EUR – Despite Greek Bailout, EUR Resumes Bearishness
The euro staged a downward reversal during yesterday’s trading session, despite the approval of a Greek bailout package that many hoped would boost riskier currencies. The EUR/USD once again fell below the 1.3200 level during European trading before staging a slight correction and stabilizing around the 1.3230 level. Against the Japanese yen, the common currency fell some 80 pips before bouncing back to the 105.40 level.
Turning to today, euro-zone news is likely to remain the driving force behind market movements. Ongoing fears regarding Greek debt continue to cause investors to abandon riskier currencies like the euro. The common currency may continue to fall unless signs that the euro-zone is recovering economically are released. Manufacturing and Service PMI’s out of both France and Germany may help the euro recoup some of its recent losses when they are released today.
CAD – USD Gains on Loonie Following Retail Sales Figure
The loonie took some losses against the US dollar in trading yesterday, after negative euro-zone news and a worse than expected Canadian Core Retail Sales figure caused investors to revert back to safe havens. The indicator came in at 0.0% following last month’s reading of 0.4%. The USD/CAD extended its upward momentum following the indicators release before stabilizing right around the 0.9970 level.
Turning to today, traders will want to continue monitoring the euro-zone for any clues as to investor risk taking. Any additional signs that the Greek debt crisis is not yet over may cause investors to keep their funds with the safe haven greenback. The USD/CAD may be able to breach the 0.9990 resistance level as a result.
Crude Oil – Oil Stays Close to $105 throughout Day
Crude oil was largely steady throughout yesterday’s trading session, despite pessimism that the recent approval of a Greek bailout deal would help the country avoid defaulting on its debt. Iranian threats to halt oil exports to any European country that did not sign a long-term contract reinforced supply side fears among investors. As a result, the price of crude oil held steady close to the $105 a barrel for much of the day.
Turning to today, traders will want to continue monitoring any announcements out of both the euro-zone and Iran. Any additional signs that the Greek debt crisis could potentially continue, may drive investors away from riskier assets, like oil. That being said, the ongoing threat that Iran could limit oil exports could keep prices at their current level.
Technical News
EUR/USD
Most long-term technical indicators place this pair in neutral territory, meaning that no defined trend is known yet for this week. The one exception is the Slow Stochastic on the weekly chart, which has formed a bearish cross. Traders will want to keep an eye on the Relative Strength Index on the same chart. Should it move into the overbought zone, a downward correction may take place.
GBP/USD
The Slow Stochastic on the weekly chart has formed a bearish cross, indicating that downward movement could occur in the coming days. This theory is supported by the Williams Percent Range on the daily chart, which is currently hovering around the -20 level. Going short may be a wise choice for this pair.
USD/JPY
After several weeks of upward movement, technical indicators are now showing this pair as overbought. The Williams Percent Range on the weekly chart has crossed into overbought territory and is now angling downward. Meanwhile, the daily chart’s Relative Strength Index has remained steady at 90, indicating that the pair has run out of bullish momentum. Going short may be the wise choice for this pair.
USD/CHF
The Slow Stochastic on the weekly chart has formed a bullish cross, indicating that the pair could see upward movement in the coming days. That being said, most other long term indicators place this pair in neutral territory. Traders may want to take a wait and see approach for this pair.
The Wild Card
CAD/JPY
The daily chart’s technical indicators are showing that this pair is in overbought territory and may see a downward correction in the near future. The Williams Percent Range is currently hovering around the -20 level, while a bearish cross has formed on the Slow Stochastic. Going short may be a wise choice for forex traders today.
Written by Forexyard.com