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Thursday, 27 May 2010

EUR Tumbles on Fresh Debt Concerns

Renewed debt concerns among the Euro-zone countries sent the single currency spiraling down yet again in overnight trading. EUR/USD dropped well below the 1.2200 level, approaching a 4-year low. Today, traders can expect a number of U.S. economic indicators to create volatility in the marketplace. Whether or these indicators this will help the Euro is still unknown.

EUR/USDGBP/USDUSD/JPYUSD/CHFAUD/USDEUR/GBP
Daily Trenddownupdownupupdown
Weekly Trenddownnonoupdowndown
Resistance1.23601.454591.001.16150.84000.8570
1.23401.452590.801.15950.83800.8550
1.23101.449590.501.15650.83500.8520
Support1.22501.443589.901.15050.82900.8460
1.22201.440589.601.14750.82700.8430
1.22001.438589.401.14550.82500.8410

Economic News

USD - Dollar Receives a Boost Following Durable Goods Report

An unexpected increase in Durable Goods Sales sent the Dollar rising against most of its major counterparts yesterday. Additionally, fresh deficit concerns in Greece and Portugal sent the Euro tumbling to nearly a 4 year low against the Dollar. Currently trading just below 1.2200, EUR/USD dropped as low 1.2160 last night. GBP/USD dropped from 1.4440 to 1.4375 before bouncing back to its current level 1.4395.

At the same time, things were not all good for the Dollar yesterday. USD/JPY was trading fairly moderately throughout the day before seeing a slight drop last night. The pair has been dipping below the 90.00 level throughout the night, which may indicate a downward trend is on the horizon.

Several U.S. economic indicators today are forecasted to send the Dollar higher. The Preliminary GDP Report and this week's Unemployment Claims Report are both expected to create heavy market volatility, and analysts are predicting both to show improvements over their respective previous readings. Should either of the indicators come in at or above expectations, trader can expect the greenback to receive a boost in afternoon trading.

EUR - China Debt Reassessment Sends Euro Lower

News that China is moving to reassess its Euro debt holdings sent the single currency spiraling down throughout the day yesterday. Growing fears in China regarding deficits in both Greece and Portugal caused the reevaluation. Consequently, the Euro tumbled to nearly a 4-year low against the U.S. Dollar. In addition, EUR/JPY fell from 111.36 yesterday, to 109.42 in late night trading. Currently, the pair has seen a slight upwards reversal and is trading around the 110.15 level.

Today, the Euro is likely to continue its downward trend as several U.S. economic indicators are likely to give a boost to the greenback. At the same time, a lack of any significant European news events will do nothing to boost confidence in the fledgling Euro economies. Furthermore, most investors are still extremely weary of investing in the Euro-zone right now, choosing instead to place their funds in safe-haven assets like the Dollar and Yen. With the U.S. economy currently in a boom period, traders may want to avoid buying into the Euro at the moment.

JPY - Yen Retains Safe-Haven Status and Continues to Make Gains

Like the Dollar, the Yen has largely retained gains made throughout the most recent trading sessions. Against riskier currencies like the Euro and British Pound, the Japanese currency has remained strong. EUR/JPY fell almost 200 pips throughout the day yesterday before staging a mild recovery. GBP/JPY was trading as high 130.50 before dropping to 129.36 last night. Currently the pair has bounced back and is hovering around 129.80.

Today, analysts are predicting the Yen to have a strong day, as Euro concerns continue to dominate the news cycle. With no realistic long term solutions for the European deficit crisis on the horizon, traders can expect the JPY to retain its safe-haven status, and as such move up alongside the greenback throughout the day.

Crude Oil - Crude Receives a Boost Following Inventories Report

After consistently falling in price over the last month, crude oil prices received a boost after a report showed U.S. inventories to be higher then expected. While this would normally lead to a drop in prices, it appears that demand in the world's largest energy consumer is also up ahead of the busy summer months. In the last 24-hours alone, prices jumped from 69.45 to their current level of 71.34.

Today, traders can expect prices to continue to rise, should the U.S. economic news come in as forecasted. A better economy in the U.S. typically leads to more discretionary spending among consumers, which in turn leads to more fuel being used.

Technical News

EUR/USD

The cross has experienced much bearishness in the last several days, and currently stands at the 1.2270 level. There is much evidence in the chart's oscillators that supports a possible bullish correction today. This is supported by the 4-hour chart's Slow Stochastic. Going long with tight stops may turn out to bring big profits today.

GBP/USD

The pair has been range-trading for a while now, with no specific direction. The Daily chart's Slow Stochastic providing us with mixed signals. All oscillators on the 4 hour chart do not provide a clear direction as well. Waiting for a clearer sign on the hourlies might be a good strategy today.

USD/JPY

The price of this pair appears to be floating in the over-sold territory on the daily chart's RSI indicating an upward correction may be imminent. The upward direction on the hourly chart's RSI also supports this notion. When the upwards breach occurs, going long with tight stops appears to be preferable strategy.

USD/CHF

The pair has recorded much bullish behavior in the past several days. However, the technical data indicates that this trend may reverse anytime soon. For example, the daily chart's Stochastic Slow signals that a bearish reversal is imminent. . Going short with tight stops might be a wise choice.

The Wild Card

Gold

Gold prices rose significantly yesterday and peaked at $1218 an ounce. However, the 4-hour chart's RSI is floating in an overbought territory suggesting that a recent upwards trend is loosing steam and a bearish correction is impending. This might be a good opportunity for forex traders to enter the trend at a very early stage.

Current Time: 08/21 03:50 GMT
# Time $€£¥ Event Per. Prev. Fore. Act. Imp.
08/21
07:00CHF+ Trade Balance1.38B1.91B-3
08:00EUR+ French Flash Manufacturing PMI47.847.9-5
08:00EUR+ French Flash Services PMI50.450.3-3
08:30EUR+ German Flash Manufacturing PMI52.451.8-5
08:30EUR+ German Flash Services PMI56.755.5-3
09:00EUR+ Flash Manufacturing PMI51.851.4-3
09:00EUR+ Flash Services PMI54.253.6-3
09:30GBP+ Retail Sales m/m0.1%0.4%-5
09:30GBP+ Public Sector Net Borrowing9.5B10.1B-3
13:30USD+ Unemployment Claims 311K299K-5
14:45USD+ Flash Manufacturing PMI55.855.7-3
15:00EUR+ Consumer Confidence-8-9-3
15:00USD+ Existing Home Sales5.04M5.01M-5
15:00USD+ Philly Fed Manufacturing Index23.920.3-5
15:00USD+ CB Leading Index m/m0.3%0.6%-1
15:30USD+ Natural Gas Storage 78B--1
08/22
ALL+ Jackson Hole Symposium***3
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