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Monday, 27 Jun 2011

Greece Debt Takes Center Stage as EUR Fluctuates

Debt concerns have taken center stage in the euro zone, with higher yielding assets like the GBP and EUR positioned to lose significant value if authorities fail to address the ominous drift to caution and reluctance among regional investors.

EUR/USDGBP/USDUSD/JPYUSD/CHFAUD/USDEUR/GBP
Daily Trendnodowndowndownnono
Weekly Trendupupdowndownupno
Resistance1.43071.597980.760.84491.05290.8943
1.42501.596980.550.83921.05060.8919
1.42201.596380.420.83571.04920.8903
Support1.41631.595380.210.83001.04690.8878
1.41341.594880.130.82791.04590.8869
1.40771.593879.920.82231.04360.8845

Economic News

USD - US Dollar Bouncing Back from Risk Aversion

The US dollar was seen in ascent against several currency rivals this morning as the hesitation among global traders pushed much of the day's volume into safety. The EUR/USD was among the hardest hit by the concerns, with the pair dropping towards 1.4115. Forex traders have witnessed significantly softer data than was forecast six months ago.

Reports released at the start of the year were expecting a moderate bounce-back by mid-2011. The inability of consumer sentiment to weather the storm of sovereign debt woes in Europe, and what is deemed an inappropriate growth policy by the Fed among domestic consumers, has worn on economic growth across the globe. Investors are pricing in a downturn for the second quarter and the ripple effect generated has been a move away from higher yielding assets and into safe havens.

With the United States being the only economy publishing significant news today, most investor sentiment will be derived later in the week. Today, forex market participants should be on the watch for any shift towards economic softness similar to that of recent weeks. The US reports on personal spending and income will only serve to underscore the data derived earlier in the month and not likely have much of an impact today.

EUR - EUR Traders Mixed as Region Struggles with Debt Woes

The euro has been experiencing moderate swings following last week's series of mixed economic reports. Traders appear to have growing concerns with the potential Greece implosion as it erupts in more unrest from imposed austerity. The Greek government won a victory last week in its vote of confidence which saw parliamentarians voting along party lines, but so far little has been done to address the shift in risk sentiment towards safety.

Debt concerns have taken center stage in the euro zone, with higher yielding assets like the GBP and EUR positioned to lose significant value if authorities fail to address the ominous drift to caution and reluctance among regional investors.

As for Monday, the euro looks to be anticipating mixed results against the other major currencies with mild bias to the downside. The euro zone will be absent from today's economic calendar with the US publishing the only news of the day. Tuesday's data releases will focus more on Great Britain alongside a German report on consumer sentiment at 7:00 GMT. Trading volume will pick up as the week progresses, but today may see minor swings as investors await more in-depth data.

NZD - NZD in Decline on Rebuilding Concerns, Trade Data

The New Zealand dollar (NZD) was seen trading significantly lower this morning as last night's trade balance data revealed a sharp decline in the island economy's trade surplus. The report marks a significant turning point in the nation's trade balance. New Zealand has witnessed steady increases to its surplus, topping last month at NZ$ 1.14B.

Expectations were for a mild decline from this recent peak to a level just near NZ$ 1.0B. The actual report unveiled a stark decline, however, to just over NZ$ 600M. The wide short-fall generated much concern that New Zealand may be witnessing a downturn from the soaring value of its currency, known colloquially as the Kiwi. Concern that this downturn may threaten the nation's rebuilding efforts after the devastating earthquake in Christchurch appears to also be pushing down heavily on the Kiwi's value, which saw its third day of bearishness this morning.

Oil - Crude Oil Prices Sliding on Slowing Demand Outlook

Crude Oil's value entered a price slide this morning with the $90 price level approaching at a faster pace than last week. Data releases out of the US today are driving many investors away from physical assets in expectations of a decline in growth among the world's largest economy. Manufacturing sluggishness is driving more than a few investors into a state of bearishness on the black gold as demand outlook appears to be slowing.

The value of the US dollar versus the euro in recent trading has also risen towards a six-day high of 1.4115, which has helped push oil prices lower. With today's steady downward movement, traders appear likely to see oil rebounding mildly over the next twenty-four hours as technical traders test the current price level, but little seems to be in the way of further decline this week.

Technical News

EUR/USD

Momentum has now turned lower as falling stochastics appear on the monthly, weekly, and daily charts. Initial support comes in at the June low of 1.4075 and the May low of 1.3970. A break here and technical traders will target the 200-day moving average at 1.3860. While the 8 cent decline from the May high is a sharp drop, traders should keep in mind that the correction the pair is currently undergoing is just that, a correction. Buyers may be lurking at the rising trend line from the June 2010 low. Resistance comes in at the recent high of 1.4440 where the 50-day and 20-day moving averages are floating.

GBP/USD

The pair has broken a significant technical barrier at the neckline from a head and shoulders pattern which measures a target at 1.5370. Monthly and weekly stochastics are turning lower so traders may expect further declines. Support is located at the March low at 1.5935 followed by the late January low at 1.5750. To the upside the neckline from the head and shoulders pattern at 1.6120 could offer traders a level to enter short as many times in a head and shoulders chart pattern the pair will revert back to the neckline only to head lower from there.

USD/JPY

Yen bears are making a stand at the 80 level. A previously broken trend line from the April high comes in at this level and will also support the bears. However, once this last bastion of support is broken the fallout could be similar the price action in March. Should the move higher continue, resistance is found at 81 and 81.75.

USD/CHF

The previous resistance at 0.8550 held and the all-time low at 0.8325 is continually being pressured so a break here may be in the works. An absence of supports or trend lines below this level makes it difficult to predict how low the pair could go.

The Wild Card

Oil

Crude oil prices are succumbing to pressure after falling below the support from the late January highs at $93. Forex traders should be targeting the mid-February low near $84, a level that coincides with a 61.8% Fibonacci retracement from the May 2010 to May 2011 move.

Current Time: 11/25 00:39 GMT
# Time $€£¥ Event Per. Prev. Fore. Act. Imp.
11/25
00:50JPY+ Monetary Policy Meeting Minutes---3
02:00JPY+ BOJ Gov Kuroda Speaks---5
03:00NZD+ Inflation Expectationsq/q2.2%--1
08:00EUR+ German Final GDP q/q0.1%0.1%-1
10:00EUR+ Italian Retail Salesm/m-0.1%0.2%-1
10:05AUD+ RBA Deputy Gov Lowe Speaks---2
10:30GBP+ BBA Mortgage Approvals 39.3K38.5K-3
11:00GBP+ Inflation Report Hearings---5
14:30CAD+ NZD Core Retail Sales m/m-0.3%0.4%-5
14:30CAD+ Retail Sales m/m-0.3%0.6%-3
14:30CAD+ Corporate Profits2.6%--1
14:30USD+ Prelim GDP q/q3.5%3.3%-5
14:30USD+ Prelim GDP Price Index q/q1.3%1.3%-1
15:00USD+ HPI m/m0.5%0.5%-1
15:00USD+ S&P/CS Composite-20 HPIy/y5.6%4.7%-1
16:00USD+ CB Consumer Confidence94.595.9-5
16:00USD+ Richmond Manufacturing Index2017-1
11/26
00:00EUR+ German 10-y Bond Auction-0.87/1.2-3
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