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Tuesday, 10 Jan 2012
EUR Remains Vulnerable Following Small Gains Monday
Despite the small gains made by the euro in trading yesterday, analysts are quick to warn that the common currency still has room to fall if negative news continues to be released from the euro-zone. While there is a light news day today, traders will still want to watch out for any developments from the meetings between France and Germany which could affect euro pairs.
USD - USD Takes Slight Losses but Remains Bullish Overall
The US dollar took slight losses against its main currency rivals throughout the trading day on Monday, as fears that the dollar was becoming too strong dominated market sentiment. The EUR/USD came off its recent 15-month low, but failed to gain enough momentum to stage a meaningful correction. The USD/JPY also continued to fall throughout the day after peaking at 77.23 last week.
Analysts are quick to warn that any bearish movement from the dollar is likely temporary, and that risk aversion is still the driving market force at the moment. Last week's bullish USD had less to do with the positive US jobs report then the euro-zone debt crisis, which has driven traders away from riskier assets. With negative news still coming out of the euro-zone, the dollar's upward momentum may continue.
Turning to today, a slow news day means that the euro-zone debt crisis is once again forecasted to dictate the direction markets take. Meetings held yesterday between France and Germany will likely do nothing to help the euro unless concrete plans are unveiled to overcome the crisis. With Italian and Spanish debt once again in the headlines, the dollar could extend its gains today.
EUR - European Debt Keeps EUR Bearish
While the euro was able to squeeze out small gains in trading yesterday, the dominant market sentiment is still against the currency going into today. Investors are eagerly waiting to see whether yesterday's meeting between French and German leaders would produce any concrete plans to combat the euro-zone debt crisis. Without a solution to the current crisis, the euro may resume its bearishness for the rest of the week.
Turning to today, the lack of significant economic indicators means that all eyes will once again be on the euro-zone. At the moment, Italian and Spanish bond sales are forecasted to determine the direction the common currency takes. In addition, Greece is once again in the news after a report came out that the International Monetary Fund was losing confidence in the country's ability to handle its debt. None of these events are forecasted to give investors very much confidence in the euro-zone and could result in further risk aversion which would push the euro down once again.
AUD - Aussie Sees Slight Gains despite Risk Aversion
The Australian dollar saw slight gains against the safe-haven US dollar and Japanese yen in trading yesterday. The currency, which is largely linked to commodity prices, saw mild bullish behaviour as traders sold off some short USD positions in favour of riskier currencies. That being said, the market is still extremely risk averse and currencies like the AUD may resume their recent bearish run in the near future.
Today, euro-zone news will likely indicate which direction the aussie is going to move. Investors are waiting to see if meetings between EU leaders and the International Monetary Fund will do anything to restore confidence in the euro-zone. If so, the AUD may see some small gains throughout the day.
Crude Oil - Oil Steadily Declines Following Last Week's Highs
Crude oil saw a mixed trading day yesterday, as risk aversion continues to dominate market sentiment. Following last week's bullish run due to Middle East tensions, oil seems once again to be leveling out. While the commodity has stayed above the psychologically significant $100 a barrel level, traders should be aware that this could change at any time.
With investors eagerly paying attention to euro-zone meetings and bond sales, crude oil prices could see some heavy fluctuations in trading today. Analysts are still pessimistic about the prospects of a euro-zone recovery. Unless positive news is released today, oil may see further downward movement.
Technical indicators on the daily chart place this currency pair in the oversold zone, indicating that an upward correction may take place in the near future. A bullish cross is forming on the Stochastic Slow, while the Williams Percent Range is right around the -90 level. Going long in your positions may be a wise choice.
Indicators on the weekly chart are showing a possible upward correction for this pair may take place. The Relative Strength Index is drifting toward the oversold zone, while the Williams Percent Range is already below the -90 level. Traders may want to go long in their positions.
Most long-term technical indicators are showing this pair trading in neutral territory, meaning that a clear trend has yet to present itself. Traders are advised to take a wait-and-see approach with their trades until a clearer picture develops.
After spiking in trading last week, technical indicators are showing possible bearish movement for this pair in the near future. The daily chart's Stochastic Slow has formed a bearish cross, while the Relative Strength Index is hovering in the overbought zone. Traders may want to go short in their positions.
The Wild Card
Technical indicators on the daily chart are showing that upward movement is possible for this pair in the near future. The Stochastic Slow has formed a bullish cross, while the Relative Strength Index is angling up right around the 20 level. Forex traders will want to keep their eyes on the hourly charts for any signs of a bullish correction today.
|09:15||EUR||Spanish Services PMI||56.7||56.9||-|
|09:45||EUR||Italian Services PMI||51.2||51.8||-|
|10:00||EUR||Final Services PMI||-||53.9||-|
|14:15||USD||ADP Non-Farm Employment Change||213K||219K||-|
|15:00||USD||FOMC Member Evans Speaks||-||-||-|
|15:45||USD||Final Services PMI||57.0||54.8||-|
|16:00||CAD||BoC Rate Statement||-||-||-|
|16:00||USD||ISM Non-Manufacturing PMI||56.7||56.5||-|
|16:30||USD||Crude Oil Inventories||-||-||-|
|00:00||EUR||French 10-y Bond Auction||-||-||-|
|00:00||EUR||Spanish 10-y Bond Auction||-||-||-|
|00:00||GBP||MPC Rate Statement||-||-||-|