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Friday, 11 Feb 2011

Euro Zone Struggling from Resurgent Debt Concerns

Concerns that the euro zone nations are not doing enough to tackle the debt woes plaguing the region has moved many traders to pull away from European assets and seek out relatively safer investments. The decline in currency value so far appears to be mild, but any additional negative data could drive the common currency to new lows if measures are not taken in the near future to boost consumer confidence.

EUR/USDGBP/USDUSD/JPYUSD/CHFAUD/USDEUR/GBP
Daily Trenddowndownupupdowndown
Weekly Trendnodownupupdowndown
Resistance1.36501.614084.300.97701.00550.8530
1.36301.612084.100.97501.00350.8510
1.36001.609083.800.97201.00050.8480
Support1.35401.603083.200.96600.99450.8420
1.35101.600082.900.96300.99150.8390
1.34901.598082.700.96100.98950.8370

Economic News

USD - USD Grows as Investors Flee Debt Concerns in Europe

The US dollar underwent a general correction to recent losses yesterday as signs of positive growth gave investors reason to buy into the greenback. Simultaneously, the euro zone witnessed the reemergence of debt concerns pushing traders out of European assets and into safe-havens, like the USD.

As a result, the dollar was trading higher versus its European counterparts. The EUR/USD moved from its daily high of 1.3620 to a recent price near the 1.3590 price level. The USD/JPY experienced somewhat more bullish behavior, climbing from 81.30 to 83.35 over the last ten days. The GBP/USD, likewise, saw the dollar gaining ground, pushing back towards 1.6070 after climbing as high as 1.6136 in late-European trading.

Today's American trade balance report and consumer sentiment reading from the University of Michigan (UoM) appear to be forecasting mixed results for the dollar. The trade balance may end up showing a widening of the deficit, leading to a mild correction to the USD prior to the day's close. However, the consumer sentiment reading is expected to show increased optimism which may help the USD sustain its latest bullish move.

EUR - EUR Lumbering Under Emergence of Debt Woes

A recent flare-up of European debt concerns struck the 17-nation common currency yesterday, pushing the EUR lower against most of its currency counterparts in late-day trading. The EUR/USD dropped below the 1.3590 level while the EUR/GBP plummeted towards 0.8435 before paring its losses in today's early Asian session.

Concerns that the euro zone nations are not doing enough to tackle the debt woes plaguing the region has moved many traders to pull away from European assets and seek out relatively safer investments. The decline in currency value so far appears to be mild, but any additional negative data could drive the common currency to new lows if measures are not taken in the near future to boost consumer confidence.

The euro zone will be largely absent from the economic calendar today. One significant report out of the region concerning French preliminary non-farm payrolls could show muted growth in the French employment sector, adding a modicum of strength to investor confidence. This figure may not carry enough impact to change the EUR's fortunes significantly, but it may help stall any additional declines.

JPY - Japanese Yen Reaches 1-Month Low vs. US Dollar

The Japanese yen has been declining this week against most of its currency rivals due to a variety of forces. Among these influences is a recent move into riskier assets, as well as an unwinding of JPY long positions. The yen is dropping towards a 1-month low against the US dollar, reaching towards 83.35 in today's early Asian sessions.

With Japanese banks on holiday Friday, in observance of National Foundation Day, the yen is going to be absent from today's market moving events. The driving force behind today's market will likely be the United States as investors appear to be preparing their portfolios in anticipation of the significant release of the UoM consumer sentiment figure. Should the greenback continue climbing, it will likely do so strongly against the yen in light of recent market trends.

Crude Oil - Oil Prices Stable Near $87 a Barrel

The plummeting price of Crude Oil over the past several trading days appears to have leveled off since last Friday. The spiking of oil prices these past several weeks concerned many traders about a suppression of the global economic recovery. Fundamental data appears to support a climb in oil prices, but this does not seem to be the case.

It is likely that positive growth in the US dollar yesterday, as well as general uncertainty about the rate of growth in a number of major oil consuming nations, has helped dampen oil demand, pushing supply higher. Another explanation could be the massive winter storms in North America creating a temporary pause in oil consumption as people are traveling less under the preventative environmental conditions.

Either way, it appears oil prices are on the decline heading into today's weekly close, but speculation may suggest a fundamental increase in value as demand appears to be on the rise going into next week.

Technical News

EUR/USD

There appears to be a fresh bearish cross on the weekly chart's Stochastic (slow), suggesting an imminent downward movement heading into this week's close. A similar bearish cross on the daily chart's MACD supports this notion. Going short may be a wise decision today.

GBP/USD

The sharp descent of the Stochastic (slow) indicator on this pair's daily chart suggests an increasing level of bearish momentum. The fresh bearish cross on the weekly Stochastic (slow) and daily MACD support this notion. Going short appears preferable.

USD/JPY

The sharp spike of this pair on the long-term charts appears to have pushed the daily Stochastic (slow) deep into the over-bought region and preparing to form a bearish cross. However, the other long-term indictors show either neutrality or signals of impending bullishness. It appears this pair may breach its resistance line at 83.50 and go higher until additional technical data can cause a corrective retracement to this latest jump in value.

USD/CHF

The MACD on this pair's daily chart reveals a fresh bullish cross and an ascending price movement, suggesting impending bullishness for the USD against the Swiss franc. The upward price movement on the weekly Stochastic (slow) and RSI support this notion. Going long may turn out to be the better choice today.

The Wild Card

EUR/CHF

This pair's indicators appear to be revealing solid downward corrective signals. The daily and weekly Stochastic (slow) show impending and fresh bearish crosses, respectively, which highlights the impending downward movement of this pair. The daily MACD also shows a bearish cross high above the 0.0 line, supporting the notion that forex traders may wish to go short on this pair today to catch the impending corrective swing from the bullish spike experienced these past several days.

Current Time: 11/28 09:57 GMT
# Time $€£¥ Event Per. Prev. Fore. Act. Imp.
11/28
10:00EUR+ Italian Monthly Unemployment Rate12.6%12.6% 13.2%1
10:00EUR+ Italian Quarterly Unemployment Rate12.5%12.4% 12.8%1
11:00EUR+ CPI Flash Estimate y/y0.4%0.3% 0.3% 3
11:00EUR+ Unemployment Rate11.5%11.5% 11.5% 3
11:00EUR+ Italian Prelim CPI m/m0.1%-0.3% -0.2%1
14:30CAD+ GDPm/m-0.1%0.4%-5
14:30CAD+ RMPIm/m-1.8%1.5%-3
14:30CAD+ IPPI m/m-0.4%0.3%-1
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