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Friday, 17 Dec 2010

EUR Sees Gains in Overnight Session

The euro continues to capitalize on the news that the EU may create a mechanism in order to prevent any future debt crises like the ones recently seen in Greece and Ireland. Since last night, the EUR/USD has gone up 60 pips and is currently trading around the 1.3270 level. Whether or not the bullish trend will continue remains to be seen, but traders will want to pay careful attention to the EU Economic Summit for clues as to any new policies within the euro zone.

EUR/USDGBP/USDUSD/JPYUSD/CHFAUD/USDEUR/GBP
Daily Trenddowndownnonodownup
Weekly Trendupdownnodownupup
Resistance1.33801.572584.900.97151.00000.8605
1.33451.568584.550.96800.99650.8570
1.33001.565084.250.96350.99300.8535
Support1.32501.558583.500.95600.98700.8475
1.32151.553583.150.95250.98350.8430
1.31851.550082.750.94900.98000.8390

Economic News

USD - Dollar Tumbles Despite Positive US News

The US dollar took some fairly substantial losses in overnight trading, despite positive news out of the US yesterday. In addition to the EUR/USD moving up, the greenback has taken a hit against both the Japanese yen and UK pound. Since reaching a peak at 84.43 yesterday afternoon, the USD/JPY pair has fallen more than 50 pips to its current level of 83.89.

The GBP/USD pair saw a steady bullish run yesterday that is still going strong. Currently trading around the 1.5640 level, the pair has moved up around 100 pips in the last 24 hours.

With no significant US economic indicators scheduled to be released today, dollar values are likely to be determined by the news out of the EU Economic Summit. Investor confidence in the euro zone has been boosted as of late, which in turn has led to a large amount of risk taking in the forex market. The safe-haven dollar will likely continue to take losses as long as faith in the EU economic recovery continues to increase.

EUR - EU Economic Summit Generating Heavy Volatility for EUR Pairs

Since rumors began to spread that EU ministers will likely create a mechanism in order to prevent any other euro zone debt crises, the euro has seen gains against the USD, but has seen little movement among its other currency rivals. The EUR/GBP went up a mere 16 pips in overnight trading, and is currently at the 0.8485 level. Similarly, the EUR/JPY pair has seen only slight gains since last night, and is currently trading at the 111.40 level.

Analysts attribute the euro's mixed performance to questions about whether the euro zone can actually stave off another debt crisis. Investors will be looking for concrete measures out of the EU summit to increase confidence in European economies. At the same time, the poor employment situation in the US has limited any dollar gains, and has generally helped the euro maintain an overall bullish trend against the greenback.

In addition to the EU summit, traders will also want to pay careful attention to today's German Ifo Business Climate figure, scheduled to be released at 9:00 GMT. As the largest economy in the euro zone, Germany tends to play a significant role in euro values. The figure is the result of a survey given to various businesses throughout Germany, and consistently leads to market volatility. A better than expected figure will likely help the euro close out the week on a positive note.

JPY - Yen Recoups Losses against Dollar

After tumbling against the US dollar for the last several days, the yen began to recoup its losses in yesterday's trading session. Since yesterday afternoon, the USD/JPY pair has dropped close to 50 pips. Currently trading around the 83.87 level, it now looks like it may be a good time for traders to begin shorting the pair at a great entry price.

Analysts have attributed these yen gains to mixed US economic data, as well as continued fears about the long term prospects for the US economic recovery. Today, with no significant economic indicators out of Japan, yen values are likely to be determined by any news out of the EU Economic Summit. While the euro recorded some small gains against the yen in overnight trading, confidence in the euro zone still remains low. That being said, should the summit yield any concrete steps toward full economic recovery, the yen could hit a bearish trend to close out the week.

Crude Oil - Oil Prices Spike Following Solid US Data

The price of crude oil soared in overnight trading as investors turned to the commodity as an alternative to the weak dollar. With the price of oil currently approaching $89.00 a barrel, analysts are predicting a strong figure to close out the week. Additionally, the prospect of real steps being taken at the EU Economic Summit has caused investors to turn to riskier commodities like oil, as opposed to the safe-haven dollar.

Today, traders will want to pay careful attention to news out of the euro zone. In addition to the summit, the German Ifo Business Climate figure will give a clear indication regarding the direction the euro zone is taking. A positive figure will likely further increase risk taking, which in turn could lead to another boost for oil.

Technical News

EUR/USD

Technical indicators are showing that bearish movement is likely to occur for this pair today. The 8-hour chart's MACD has formed a bearish cross, indicating downward movement may occur. Furthermore, the daily chart's RSI is approaching overbought territory. Traders will want to pay attention to this indicator. Once it breaches the resistance line, the pair could move down.

GBP/USD

Most technical indicators show this pair trading in neutral territory. At the same time, traders will want to pay attention to the Stochastic (slow) on the 4-hour chart, as it seems that it could form a bearish cross. Until then, taking a wait-and-see approach may be the preferred strategy.

USD/JPY

A bearish cross is forming on the 4-hour chart's MACD, indicating downward movement may take place in the near future. A similar trend can be seen on the daily chart's William Percent Range. Going short with tight stops may prove to be profitable today.

USD/CHF

The Williams Percent Range on the 8-hour chart is currently in the oversold territory, meaning an upward correction could take place today. Similarly, the Relative Strength Index (RSI) on the daily chart is showing that a bullish move may take place in the near future. Going long is the recommended strategy for today.

The Wild Card

CHF/JPY

The Williams Percent Range on the 8-hour chart shows the pair in the overbought territory. This theory is supported by the RSI on the daily chart. Now may be a good time for forex traders to enter into sell positions for potentially significant profits before the downward breach occurs.

Current Time: 10/23 00:51 GMT
# Time $€£¥ Event Per. Prev. Fore. Act. Imp.
10/23
02:30AUD+ NAB Quarterly Business Confidence6--3
03:35JPY+ Flash Manufacturing PMI51.752.1-1
09:00EUR+ French Flash Manufacturing PMI48.848.6-5
09:00EUR+ French Flash Services PMI48.448.2-3
09:00EUR+ Spanish Unemployment Rate24.5%24.1%-3
09:10GBP+ MPC Member Broadbent Speaks3
09:30EUR+ German Flash Manufacturing PMI49.949.6-5
09:30EUR+ German Flash Services PMI55.755.0-3
10:00EUR+ Flash Manufacturing PMI50.350.0-3
10:00EUR+ Flash Services PMI52.452.0-3
10:30GBP+ Retail Sales m/m0.4%-0.1%-5
10:30GBP+ BBA Mortgage Approvals 41.6K43.5K-3
12:00GBP+ CBI Industrial Order Expectations-4-3-3
14:30USD+ Unemployment Claims 264K269K-5
15:00USD+ HPI m/m0.1%0.4%-1
15:45USD+ Flash Manufacturing PMI57.557.2-3
16:00EUR+ Consumer Confidence-11-12-1
16:00USD+ CB Leading Index m/m0.2%0.8%-1
16:30USD+ Natural Gas Storage 94B97B-1
23:45NZD+ Trade Balance-472M-620M-5
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