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Friday, 13 May 2011

EUR Lower vs. USD as Traders Seek Safety on Growth Concerns

The EUR was not able to hold its recently stable price against the US dollar as regional investors battled over the direction of the 17-nation common currency. Regional bears won the day as the rumor mill chewed on the speculative reports that Greece had already secured a new financial aid package, or that it was planning to exit the euro zone. With both staunchly refuted, traders rapidly moved to safety as the speed of assistance appears to be slow in coming.

EUR/USDGBP/USDUSD/JPYUSD/CHFAUD/USDEUR/GBP
Daily Trenddowndowndownnonoup
Weekly Trenddowndownnoupdownno
Resistance1.42851.633081.650.89501.07050.8815
1.42551.631081.450.89301.06850.8795
1.42251.628081.150.89001.06550.8765
Support1.41651.622080.550.88401.05950.8705
1.41351.618080.250.88101.05650.8675
1.41151.616080.050.87901.05450.8655

Economic News

USD - US Dollar Bullish against Riskier Assets

The US dollar rebounded strongly versus the euro and pound yesterday as traders began to bail out of the region from fear that euro zone policymakers would fail to meet the Greek debt crisis rapidly enough. The result has been for the EUR/USD to move strongly bearish, with 1.4100 well in reach. Against the pound, the greenback held close to 1.6280, though bullishness in Britain has generated pressure beneath the Cable in anticipation of an uptick.

Yesterday's retail sales data out of the United States initially appeared to support the US dollar by holding American spending data steady. The publication of US PPI yesterday supported this movement as inflationary growth hints at pressure on the Fed to adjust its stance on interest rates. US business inventories were higher, however, which hints at weakened demand and could undercut yesterday's bullishness.

For today, US CPI data is on tap with an expectation to hold last month's growth figures steady. The producer price index (PPI) and its complimentary core data yesterday surprised investors and any similar movement in the CPI data could support the USD to continue running bullish. The US dollar has gained from risk aversion lately, with its own economic fundamentals appearing soft, but data from the last two days has begun to shift this sentiment.

EUR - EUR Remains Bearish as Investors Seek Safety

The euro fell below its three-week low versus the US dollar yesterday, with a price of 1.4150 rapidly approaching. As speculators tore into the euro zone with a harsh reaction to the sluggish speed of officials' handling of the debt woes, the EUR felt the sting and dropped to as low as $1.4198 in later trading hours.

The EUR was not able to hold its recently stable price against the US dollar as regional investors battled over the direction of the 17-nation common currency. Regional bears won the day as the rumor mill chewed on the speculative reports that Greece had already secured a new financial aid package, or that it was planning to exit the euro zone. With both staunchly refuted, traders rapidly moved to safety as the speed of assistance appears to be slow in coming.

As for today, the euro zone will be largely absent from the economic calendar once more with several weaker reports, predominant among them is a speech by ECB President Jean-Claude Trichet at the Reform of the Financial System conference in Madrid, Spain. The speech comes just ahead of the euro zone's release of its Flash GDP figures which are expected to show 0.6% quarterly growth for the region; well above the last reading of 0.3%. Should these reports generate speculation over an ECB rate hike, forex traders could see some volatile upticks in the EUR pairs.

JPY - JPY Continues to See Mixed Results

The Japanese yen (JPY) has been trading with somewhat mixed results since Friday, with gains made against several currencies and losses elsewhere. After a week of ups and downs, the Japanese yen appears set to take losses today as investors appear to be seeking higher yields. The dominant stance of risk aversion overarching yesterday's environment of optimism has many traders moving towards the yen against the higher yielding currencies like the euro, which dropped to a six-week low during yesterday's afternoon sessions.

However, the yen was slightly lower versus the US dollar as the pair moved up from previous intervention levels near 80.00. The USD/JPY held steady at yesterday's low, finding support near 80.30 and moving up towards 81.10 at today's opening Asian sessions. Japan's Current Account was published yesterday morning and revealed a sharp downturn in data which may put some pressure on the island currency. Market news released out of the US and Europe today will likely be the driving force behind JPY values, though.

Crude Oil - Crude Oil Prices Continue Plummet after Natural Gas Storage Report

Oil prices dropped sharply again yesterday with the New York Mercantile Exchange session closing just below the $98 price mark. US oil stockpiles rose over 3 million barrels for the second week in a row, marking a significant uptick in American hoarding behavior. Yesterday's natural gas storage report also showed an above-expected level of stockpiling. An additional 70 billion cubic feet was added to US gas inventories this past week, higher than the forecast 69 billion cubic feet.

The value of the US dollar versus the euro in recent trading has pushed towards a four-week high near 1.4190, oil prices failed to find support as a result. With yesterday's sharp downtick during the later sessions, and this morning's continuation of that movement, traders appear likely to see oil reaching a bit lower as this week comes to an end - though a return to riskier assets could lift oil prices one more time if the market deems it worthy.

Technical News

EUR/USD

The EUR/USD corrected some of its losses yesterday and reached as high as the 1.4280 level. Nevertheless, a bearish cross is forming on the 4-hour chart's Slow Stochastic. It seems that the pair might resume the bearish move today. Going short with tight stops seems to be the right strategy.

GBP/USD

The Cable continues to fall and is currently trading near the 1.6240 level. In addition, the MACD on both the 4-hour and the 1-day charts is providing bearish indications and the downward move could extend today, with potential to reach the 1.6150 level.

USD/JPY

The USD/JPY is in the midst of a bullish correction and has climbed about 100 pips during the past three days. Currently, as the RSI on the daily chart has crossed the 30-line another bullish session might be expected. Going long may be the right choice today.

USD/CHF

Ever since the USD/CHF pair bottomed near the 0.8560 level it's been slowly climbing back, and is now trading near the 0.8670 level. However, a bearish cross on the daily chart's Slow Stochastic suggests that the pair might erase recent gains today, and could reach as low as 0.8600 level.

The Wild Card

Gold

Gold's recent climb to an all-time high of $1,576 an ounce has initiated a bearish correction, and gold is currently trading near the $1,500 level. In addition, as the Slow Stochastic on the weekly chart continues to provide bearish indications, it seems that the commodity might proceed with the bearish correction today. This might be a great opportunity for forex trader to join a popular trend.

Current Time: 04/18 15:39 GMT
# Time $€£¥ Event Per. Prev. Fore. Act. Imp.
04/21
15:00USD+ CB Leading Index m/m0.5%0.8%-1
04/22
01:00AUD+ CB Leading Index m/m0.2%*-3
13:30CAD+ Wholesale Sales m/m0.8%0.7%-3
14:00USD+ HPI m/m0.5%0.6%-1
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