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Friday, 9 Apr 2010
Greece Concerns Allayed by ECB; EUR Rebounds
The Euro was provided assistance earlier today when the European Central Bank (ECB) announced that interest rates would be held steady - as was expected - and that there was little fear of a sovereign default by Greece. Such a turn of events gave the 16-nation single currency a much needed boost against its primary rival, the US Dollar, but some analysts contend that these gains will be short-lived.
USD - EUR/USD Exits Down-Trend
After continually gaining against its primary rivals in trading over the past few days, the USD has apparently reversed course. Against the Euro, the greenback was on a healthy rise until reaching its peak at 1.3280, the pair rebounded towards 1.3355 at the end of New York trading. Against the British Pound, however, the behavior was much more erratic. The USD spent most of the day in decline against the Sterling, but has begun to pare losses by the middle of the Asian market hours. The pair currently sits at 1.5270.
The Euro was provided assistance earlier today when the European Central Bank (ECB) announced that interest rates would be held steady - as was expected - and that there was little fear of a sovereign default by Greece. Such a turn of events gave the 16-nation single currency a much needed boost against its primary rival, the US Dollar.
Heading into this week's conclusion, both the European and American economies will remain relatively silent, but Canada will be publishing moderately important data concerning employment. Most investors are expecting little change in the value of the major currency pairs, but due to today's Canadian economic releases, the CAD may experience a healthy dose of volatility.
EUR - EUR Gains from ECB Governor Statements
The EUR experienced moderate bounces in positive price volatility today following news from European Central Bank (ECB) governor Jean-Claude Trichet. In an anticipated move, the ECB decided to hold interest rates steady while declaring growing stability for Greece. Trichet declared that there was little fear of a sovereign default by Greece in the future and the impact was gripped by short-term bursts in EUR growth.
Following the announcement by Trichet, the EUR exited its recent week-long downtrend against the USD and bounced back towards 1.3355 by the end of yesterday's trading. Against the GBP the EUR witnessed two sharp spikes after the announcement by the ECB, but was unable to sustain its growth and fell back into its downtrend, sending a wave of chatter among analysts that a similar fate was due for the EUR/USD in today's trading.
With little news expected from the Euro-Zone today, the prospects of a USD bounce-back are moderate. But the United States will also be absent from the calendar, pushing the odds closer to 50-50. A number of French and German industrial figures are expected and could help the EUR hold its gains, should they reach market expectations.
JPY - JPY Bearish against Majors; Weekly Gains at an End
After a 4-day period of decline, the USD/JPY currency pair has appeared to bounce back towards the end of yesterday's trading. The pair was trading within a steady bearish channel since Monday, but today's downturn of the USD against most currency rivals has resulted in a rebound of the Dollar against the Yen. Upon reaching a weekly low of 92.74, the pair has recent popped back up to 93.48 in today's early morning hours.
Similar results were experienced against the EUR, GBP, and CHF this morning as well. A broad sell-off of Japanese Yen appears to have taken place as stocks rebound moderately and investors pull their money out of the traditional safety of the island currency. With a somewhat light news day ahead, the Yen may not be able to overcome these recent losses until next week.
OIL - Spot Crude Oil Price Rebounds after Week-Long Decline
It appears as if the price of Crude Oil has received a mild boost from the falling USD in yesterday's trading. Upon meeting heavy resistance at the $87.00 price level, the price of oil then dropped below $84.50, but has recent recovered and is trading at $85.70. The value of the US Dollar is driving these price fluctuations but little news will be pushing the USD in today's trading.
With hardly any fundamental data releases coming out of the United States today, the value of the USD most likely will not change drastically before the end of this week's trading. This supports the notion that oil prices could continue to rise slowly and steadily throughout Friday's trading. However, should the Dollar experience sharp price movements in either direction, there will undoubtedly be a correlated price movement for Crude Oil.
Yesterday's upward correction may have finished running its course. A bearish cross has formed on the 4-hour Slow Stochastic Oscillator, indicating a possible drop in the price. The price action looks to be contained in the lower half of the Bollinger Bands, as yesterday's breakout failed to breach the 20-day moving average line. This indicates a strong downward trend. Traders may want to go short today.
This past week the pair has maintained specific price levels, range trading between the prices of 1.5130 and 1.5320. Traders can take advantage of this environment by going short to the support line with a limit at the support level and then going long with a limit at the resistance level. A price breakout above or below these levels would signal an end to this range trading environment.
The daily chart shows signs of a potential larger move for the pair. The MACD lines appear on the verge of completing a bearish cross, indicating the pair may fall. The 14-day Relative Strength Indicator is very close to breaking the upward sloping trend line. This would support a larger downward price move. Traders may want to wait for the completion of these sell signals and then go short.
The pair's short term bullish trend is strong as shown by the price action on the 4-hour chart. The pair fell to the 20-day moving average line of the Bollinger Bands where it proceeded to rise once again. This is supported by the 14-day RSI that has resumed its uptrend. A break above the 1.0740 resistance line could signal a potential breakout.
The Wild Card
The stock index shows a powerful uptrend. The price has moved back above its long term rising trend line and is trading above its 20-day, 50-day, 100-day, and 200-day simple moving average lines in that order. Also the ADX 14 is floating at 53. Anything above 40 indicates a strong trending environment. Forex traders may want to go long in this type of trend.
|03:00||CHF||Daylight Saving Time Shift||-||-||-|
|03:00||EUR||Daylight Saving Time Shift||-||-||-|
|03:00||GBP||Daylight Saving Time Shift||-||-||-|
|01:00||EUR||German Prelim CPI||m/m||0.9%||-||-|
|01:00||EUR||Italian 10-y Bond Auction||1.36|1.5||-||-|
|01:50||JPY||Prelim Industrial Production||m/m||3.7%||-||-|