The yen came off a recent 2 ½ year low against the US dollar yesterday, as investors spent the day speculating about the possible steps the Bank of Japan was willing to take to increase inflation. Meanwhile, a lack of significant international economic news led to relatively little movement for most other currencies and commodities over the course of day. Today, traders can anticipate significantly more volatility in the marketplace following the release of the German ZEW Economic Sentiment figure at 10:00 GMT, the US Existing Home Sales at 15:00, and a speech from ECB President Draghi at 18:00.
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 | 1.3403 | 1.5983 | 90.52 | 0.9445 | 1.0614 | 0.8482 |
| 1.3360 | 1.5931 | 90.02 | 0.9392 | 1.0568 | 0.8437 | |
| 1.3332 | 1.5900 | 89.73 | 0.9365 | 1.0568 | 0.8410 | |
| Support | 1.3289 | 1.5848 | 89.24 | 0.9314 | 1.0540 | 0.8364 |
| 1.3261 | 1.5817 | 88.95 | 0.9286 | 1.0496 | 0.8337 | |
| 1.3218 | 1.5765 | 88.46 | 0.9237 | 1.0422 | 0.8292 |
Economic News
USD – Home Sales Data Set to Impact Dollar
The US dollar saw relatively little movement against its higher-yielding currency rivals yesterday, largely due to a lack of significant international economic news. The USD/CHF dropped slightly more than 30 pips during early morning trading, eventually trading as low as 0.9311, before bouncing back to 0.9320 toward the end of the European session. Against the Japanese yen, the dollar fell some 34 pips during the morning session before staging an upward correction later in the day. By the beginning of afternoon trading, the USD/JPY was at 89.70, not far from a recent 2 ½ year high.
The main piece of US news today is likely to be the Existing Home Sales figure, set to be released at 15:00 GMT. Analysts are expecting the figure to come in at 5.09M, slightly higher than last month’s 5.04M. If today’s news comes in at or above the expected level, confidence in the US economic recovery could give the greenback a boost against its higher yielding currency rivals, including the euro, Swiss franc and Australian dollar.
EUR – German Data, Draghi Speech Expected to Generate Market Volatilty
The euro began the week largely range trading against its main currency rivals, as investors were hesitant to open large positions before potentially significant news this week. The EUR/USD fell some 29 pips during the morning session, eventually reaching as low as 1.3299 before bouncing back to 1.3315 during the afternoon session. Against the British pound, the common-currency lost close to 20 pips during the first part of the day before gaining 25 during afternoon trading. The EUR/GBP was trading at 0.8400 by the end of the European session.
Today, euro traders will want to pay close attention to the German ZEW Economic Sentiment, scheduled to be released at 10:00 GMT. Analysts expect the indicator to come in at 12.2, a significant increase over last month’s 6.9. If today’s news comes in at or above the expected value, investor confidence in the euro-zone economic recovery could result in the euro turning bullish during mid-day trading. Later in the day, a speech from ECB President Draghi also has the potential to generate market volatility. Should Draghi voice optimism in the euro-zone economic recovery, the euro could see upward movement.
Gold – Euro-Zone Data May Result in Gains for Gold Today
While gold saw minor downward correction during European trading yesterday, prices were able to remain within reach of a recent one-month high. The precious metal fell close to $5 an ounce during morning trading, eventually reaching as low as $1685.65, before bouncing back to the $1688 level during the afternoon session.
Today, gold traders will want to pay attention to the German ZEW Economic Sentiment figure, set to be released at 10:00 GMT. A better than expected result will likely generate risk taking among investors, which could boost gold prices during the mid-day session.
Crude Oil – Crude Oil Remains within Reach of 4-Month High
The price of crude oil saw very little movement yesterday, largely due to a bank holiday in the US and a lack of significant international economic indicators. The commodity spent most of the day trading around the $95.65 level, within reach of a recent four-month high of $96.01.
Today, US housing data could result in volatility for oil prices. If the Existing Home Sales figure comes in above the forecasted 5.09M, speculations that an improved US economy will lead to increased demand for crude could lead to an increase in oil prices.
Technical News
EUR/USD
A bearish cross has formed on the daily chart’s MACD/OsMA, indicating that a downward correction could occur in the near future. This theory is supported by the Williams Percent Range on the weekly chart, which is currently in overbought territory. Opening short positions may be the smart choice for this pair.
GBP/USD
The Williams Percent Range on the weekly chart has crossed into oversold territory, indicating that an upward correction could occur in the near future. Furthermore, the Slow Stochastic on the daily chart has formed a bullish cross. Traders may want to open long positions for this pair.
USD/JPY
The Relative Strength Index on the weekly chart has crossed into overbought territory, indicating that a downward correction could occur in the near future. This theory is supported by the Williams Percent Range on the same chart, which has formed a bearish cross. Opening short positions may be the wise choice for this pair.
USD/CHF
While the MACD/OsMA on the weekly chart has formed a bullish cross, most other long-term technical indicators show this pair trading in neutral territory. Traders may want to take a wait and see approach for this pair, as a clearer trend may present itself in the coming days.
The Wild Card
EUR/SEK
A bearish cross has formed on the daily chart’s Slow Stochastic, indicating that a downward correction could occur in the near future. This theory is supported by the Williams Percent Range on the same chart, which is currently in overbought territory. Opening short positions may be the best choice for forex traders today.
Written by Forexyard.com
