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Thursday, 24 Dec 2009

Dollar Tumbles against Yen and Euro

Following a disappointing American New Home Sales Report released yesterday, the U.S. Dollar seems to have reversed course in trading against its major counterparts. Both the Euro and Yen made impressive gains against the greenback, which both seem to have held going into Thursday's trading session.

EUR/USDGBP/USDUSD/JPYUSD/CHFAUD/USDEUR/GBP
Daily Trendupupdowndownupno
Weekly Trendnoupnonoupno
Resistance1.44351.608592.301.04850.89150.9060
1.44051.605092.001.04550.88850.9030
1.43751.602091.731.04250.88550.9000
Support1.43101.595691.051.03600.87950.8940
1.42801.592590.851.03300.87650.8910
1.42501.589590.551.03000.87300.8880

Economic News

USD - Dollar Take Losses Following Home Sales Report

According to a new report released yesterday, new home sales in the U.S. have fallen to a 7-month low. Despite the numerous positive indicators that have been released in recent weeks regarding the U.S., investor confidence in the American recovery was dampened due to the housing report. Causing further damage, a revised figure for November's new home sales shows that that month's figure was actually lower then originally stated.

After rising to a 3 1/2 month high against the Euro at 1.4216 on Tuesday, the Dollar has since fallen and is currently trading at around the 1.4345 level. USD/JPY also saw downward movements following the report, and is currently trading at approximately 91.50.

Trading today could become volatile for the greenback, as several news events may determine the direction the currency takes in the near future. The Core Durable Goods Orders and this week's Unemployment Claims Report are both set to be released at 13:30 GMT. If the numbers keep in line with the forecasted figures, the Dollar may be able to reverse some of its losses. If the numbers fall below predictions, the Dollar may drop further ahead of the Christmas holiday.

EUR - Euro Recoups Losses against Major Counterparts

It was not only against the Dollar that the Euro made gains in trading yesterday. Following the release of meeting minutes from the Monetary Policy Committee (MPC) of the Bank o England, the Euro moved to a one week high against the Sterling. The MPC could not give a clear indication on whether the British economy is improving or not heading into the New Year. Consequently investor confidence was shaken, a sentiment the Euro was able to capitalize on.

Currently EUR/GBP is trading at 0.8974, an 8-day high. With no major news events for either the Euro or Sterling scheduled for Thursday, traders can expect the current values to hold into next week when markets reopen following the Christmas holiday.

Today traders will want to keep an eye on the economic indicators coming out of the U.S. Any figure below the forecasted numbers would likely solidify the Euro gains made yesterday. On the other hand, the U.S. has had continuously strong unemployment numbers the past several weeks. If this trend continues, it could mean bad news for the Euro.

JPY - Yen Falls against Riskier Currencies

Speculation is abound that the Bank of Japan will keep interest rates low for the foreseeable future in order to curb deflation. The Yen has since fallen against high risk currencies, most notably the Australian Dollar which gained 0.2% against the JPY in trading. Currently the pair is valued at 80.65. Traders may want to keep an eye on the pair, as the historically volatile Aussie will likely cause a downward correction in the near future.

As there are no major JPY news events ahead of the holiday weekend, trading should be relatively muted today. Forex customers will still want to pay attention to the U.S. unemployment figures, as they are likely to impact the USD/JPY pair. A positive figure may result in a reversal of the gains made by the Yen yesterday against the greenback.

Crude Oil - Oil Prices Spike Following U.S. Report

Crude Oil prices shot up over $2 a barrel yesterday following a report stating that U.S. supplies have fallen significantly lower than anticipated. America is the world's largest energy consuming nation. When supplies are down there, prices typically rise in order to compensate for an increase in demand. Prices were further elevated due to severe winter weather in the Eastern part of the country.

Currently crude oil is trading at around $77.25. Traders will want to wait and see how the market reacts to the U.S. news events set to be released today in order to further gauge the direction oil will take. If the news negatively reflects on the pace of the American economic recovery, crude prices will likely continue to rise. Conversely, if the reports released today are positive, crude may retreat from its current high levels.

Technical News

EUR/USD

Mixed signals are evident for this pair. The 2 hour RSI is floating in the overbought territory while the 4 hour chart Slow Stochastic is exhibit a fresh bearish cross, while the daily RSI is floating in the oversold territory. Going short for the day with tight stops might be advised.

USD/JPY

The pair seems to be exhibiting mixed signals. The hourly and 2 hour charts show a breach of the lower Bollinger Band with the two hour RSI floating near the oversold territory and the hourly Slow Stochastic showing an impending bullish cross forming. The daily chart's Slow Stochastic, however, is showing a bearish cross and the daily and 8 hour RSI is floating in the overbought territory. It seems that going long with tight stops for the day is advised

GBP/USD

The daily and 8 hour RSI are floating in the oversold territory, with the daily chart's Slow Stochastic exhibiting a bullish cross as well as the 4 hour MACD. Going long for the day seems to be a good option

USD/CHF

The two hour RSI is floating in the oversold territory, with the 4 hour Slow Stochastic and hourly MACD showing fresh bullish crosses. Going long for the day might be a wise choice.

The Wild Card

EUR/NOK

The daily, 4 hour and 2 hour RSI are floating in the oversold territory with the daily and 4 hour Slow Stochastic exhibiting fresh bullish cross forming. The hourly MACD is also exhibiting a fresh bullish cross. Forex traders are advised to go long for the day.

Current Time: 10/20 23:46 GMT
# Time $€£¥ Event Per. Prev. Fore. Act. Imp.
10/21
01:00GBP+ 10-y Bond Auction2.57|1.7--1
02:30AUD+ Monetary Policy Meeting Minutes---5
04:00NZD+ Credit Card Spendingy/y4.2%--1
06:30JPY+ All Industries Activity Indexm/m-0.2%-0.3%-1
08:00CHF+ Trade Balance1.33B2.43B-3
10:30GBP+ Public Sector Net Borrowing10.9B9.3B-3
10:55AUD+ RBA Deputy Gov Lowe Speaks---3
16:00USD+ Existing Home Sales5.05M5.11M-3
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