The US dollar saw gains against virtually all of its main currency rivals on Friday, following a better than expected Non-Farm Payrolls report which boosted confidence in the American economic recovery. The USD/JPY shot up to a six-month high, while the EUR/USD fell to its lowest point in one-month. This week, traders will want to pay attention to several indicators out of the US and euro-zone. Most importantly, the US presidential election on Tuesday is likely to lead to volatility in the marketplace. Additionally, the European Minimum Bid Rate on Thursday followed by US consumer sentiment data on Friday both have the potential to impact the major currency pairs and commodities.
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 | 1.2929 | 1.6127 | 81.27 | 0.9500 | 1.0460 | 0.8094 |
| 1.2882 | 1.6080 | 80.82 | 0.9451 | 1.0414 | 0.8051 | |
| 1.2853 | 1.6052 | 80.54 | 0.9422 | 1.0385 | 0.8025 | |
| Support | 1.2807 | 1.6006 | 80.08 | 0.9372 | 1.0340 | 0.7983 |
| 1.2778 | 1.5977 | 79.80 | 0.9343 | 1.0312 | 0.7957 | |
| 1.2731 | 1.5931 | 79.35 | 0.9293 | 1.0265 | 0.7914 |
Economic News
USD – US Presidential Election Set to Impact Markets This Week
The US dollar had a significantly bullish day on Friday, followed by a better that expected Non-Farm Payrolls report that signaled that the US economic recovery is gaining traction. The USD/JPY shot up 44 pips after the news was released to trade as high as 80.66, a six-month high. The pair closed out the week at 80.46. Against the Swiss franc, the greenback gained close to 90 pips over the course of the day, and eventually finished out the week at 0.9404.
This week, the most impacting piece of US news is likely to be Tuesday’s presidential election. Analysts are forecasting that investors may shift their funds to riskier assets if Mitt Romney defeats President Obama in the closely fought race. Additionally, traders will want to pay attention to today’s ISM Non-Manufacturing PMI, Thursday’s Trade Balance and Unemployment Claims figures, as well as consumer sentiment data on Friday. Any better than expected news could help the dollar extend last week’s gains against the JPY and CHF.
EUR – Euro Takes Losses Following US Employment Data
The euro turned bearish on Friday after employment data showed that more jobs were added in the US than expected last month. Against the greenback, the common currency fell more than 90 pips throughout the day, eventually trading as low as 1.2819, a one-month low, before bouncing back to 1.2835 where it finished out the day. The euro also took losses against the Japanese yen, eventually trading as low as 103.01, down more than 70 pips for the day. The EUR/JPY closed the week at 103.27.
Turning to this week, in addition to a batch of US news, including the presidential election, traders will want to focus on several potentially impacting euro-zone indicators. Today’s Spanish Unemployment Change figure, followed by German Industrial Production data on Wednesday and the Minimum Bid Rate and ECB Press Conference on Thursday all have the potential to create significant market volatility. Any worse than expected data could lead to risk aversion in the marketplace, which may result in additional losses for the euro.
Gold – Gold Tumbles to Two-Month Low
The price of gold fell more than $30 an ounce on Friday, eventually hitting a two-month low, following better than expected US data which boosted the dollar against its main currency rivals. Typically, the price of gold decreases when the dollar is bullish, as it becomes more expensive for international buyers. The precious metal finished out the week at $1677.61.
This week, gold traders will want to pay attention to the results of the US presidential election and its impact on investor risk sentiment. Some analysts are predicting that a win for Mitt Romney could boost risk taking, which may help gold recover some of Friday’s losses.
Crude Oil – Crude Oil Falls amid Strong US Data
The price of crude oil fell more by more than $2 a barrel on Friday, following better than forecasted US employment data which strengthened the dollar, making oil more expensive for international buyers. In addition, concerns regarding global demand for crude weighed down on prices. Oil ended up finishing the week at $84.81.
This week, oil traders will want to pay attention to both euro-zone and US data. Any better than expected news may signal to investors that demand for the commodity will increase, which could result in prices turning bullish. Wednesday’s US Crude Oil Inventories data is also likely to provide a solid indicator of American demand, with a lower than expected result likely to help boost crude.
Technical News
EUR/USD
While the Williams Percent Range on the daily chart is in oversold territory, most other long-term technical indicators show this pair range trading. Traders may want to take a wait and see approach at this time, as a clearer picture is likely to present itself in the near future.
GBP/USD
A bearish cross appears to be forming on the weekly chart’s MACD/OsMA, indicating that a downward correction may occur in the coming days. Furthermore, the Williams Percent Range on the same chart is hovering close to overbought territory. Traders will want to keep an eye on these two indicators, as they may soon signal impending bearish movement.
USD/JPY
The daily chart’s Relative Strength Index is currently in overbought territory, indicating that a downward correction could occur in the near future. Furthermore, the Slow Stochastic on the weekly chart appears close to forming a bearish cross. Opening short positions may be the smart choice for this pair.
USD/CHF
The Slow Stochastic on the daily chart is currently forming a bearish cross, indicating that this pair could see a downward correction in the near future. This theory is supported by the Williams Percent Range on the same chart, which has crossed into overbought territory. Going short may be the wise choice for this pair.
The Wild Card
CAD/CHF
The Bollinger Bands on the daily chart are narrowing, indicating that this pair could see a price shift in the near future. In addition, the Williams Percent Range on the same chart has crossed over into overbought territory, signaling that the price shift could be bearish. This may be a good time for forex traders to open short positions ahead of a possible downward correction.
Written by Forexyard.com