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Monday, 25 Apr 2011

US Existing Home Sales Only Significant News Today

With Europe still on holiday in observance of Easter, today's markets will be highly illiquid, making most currencies continue to trade within tight ranges until the opening of trading on Tuesday. Tomorrow's news should be much more affecting on the region's currency values, but as for today traders may want to look to the USD for market direction with its impactful housing report scheduled for 15:00 GMT.

EUR/USDGBP/USDUSD/JPYUSD/CHFAUD/USDEUR/GBP
Daily Trendupupupdownupup
Weekly Trendupupupdownupdown
Resistance1.46451.659583.100.89501.08190.8905
1.46221.657382.800.89251.07890.8882
1.45911.654082.480.88871.07550.8851
Support1.45301.648081.850.88261.06900.8779
1.44991.644881.530.87901.06580.8747
1.44721.642581.320.87711.06350.8725

Economic News

USD - Forestalled Chinese Revaluation May Boost USD this Week

Following last week's thin holiday market conditions, the US dollar finds itself in a position to either sink or soar at the beginning of this week. Most analyses at the conclusion of trading last week had begun to call for a fast-paced injection of liquidity which was almost certainly going to favor the euro over its Atlantic rival.

However, the battered currency caught a break Friday and may gain from a market correction early this week. The greenback has a chance to rebound swiftly if a possible China revaluation fails to materialize. Discussions seemed to view a policy adjustment by China as a certainty, but rumors have emerged that the measure may get forestalled thus forcing another portfolio adjustment among traders who were already pricing in the expected change. The expectant sell-off of USD may therefore get delayed and the greenback may find itself on the upside as a result.

Ahead of the Easter weekend global markets were highly illiquid, meaning the new concerns over the competitiveness of the buck based on a potential move from China were likely over-exaggerated, some analysts have said.

As for today's trading, most major economies remain in holiday vacation mode, meaning we could still see thin market conditions extending until Tuesday. The exception is the Japanese and US economies, both of which are publishing significant figures today. Out of the United States, traders will witness the publication of the New Home Sales report at 15:00 GMT. Should the housing market experience growth similar to last week's, the greenback may find its legs, especially considering the delayed sell-off brought on from the measures discussed above.

EUR - EUR Mixed as Thin Markets Create Uncertainty

The euro has experienced mixed results against most of its currency rivals after failing to breach key resistance levels and then stumbling on renewed concern over sovereign debt and monetary policy uncertainty. The EUR/USD has held relatively stable as of Friday and does not appear to be revealing any signal of pushing strongly in either direction today.

The region continues to struggle with debt concerns, but area-specific shifts in risk appetite have helped drive the EUR's surge by the middle of last week. Soaring oil prices have supported the euro against the dollar, but such strength may have overextended the euro and is now applying heavy weights to its value. The speculation of a move by China to revalue its currency had also convinced many that a broad sell-off in the USD would take place early this week, but rumors are spreading that this move may get delayed, helping the USD hold its ground against losses.

With Europe still on holiday in observance of Easter, today's markets will be highly illiquid, making most currencies continue to trade within tight ranges until the opening of trading on Tuesday. Tomorrow's news should be much more affecting on the region's currency values, but as for today traders may want to look to the USD for market direction with its impactful housing report scheduled for 15:00 GMT.

JPY - JPY Gaining from Illiquid Markets

The Japanese yen rose against its major counterparts in early Asian deals on Monday. Presently, the yen is trading at 82.45 against the US dollar and 134.90 versus the pound. Against the euro, the yen is trading much higher at 118.70, compared to an early Asian session's multi-month low of 123.35 last week.

Growing concerns regarding Japan have driven the JPY lower recently amid deteriorating fundamentals out of the island economy. But those weakening fundamentals are being offset by debt concerns out of Europe as the European Monetary Union (EMU) persists in dealing with a burgeoning debt crisis that simply won't dissipate. For today traders will want to look to the USD for market direction, but so long as Europe continues to fear rising debt out of Spain and Portugal, going long on the yen may continue to remain appealing.

Crude Oil - Crude Oil Price Reaching toward 2008 Highs

Oil prices have turned upward heading into this week, with the price elevating itself beyond $113 a barrel as of this morning, sparking concern that prices will reach back into the $120 range of 2008. Continued fighting in Libya is partially behind the sell-resistance among global commodities like oil, but improved refining has also helped bolster earnings among Big Oil corporations improving other elements involved in industry and oil production. Concerns about Japan's reconstruction, declining production, and ever-present nuclear crisis are also pushing economic fundamentals in a direction favoring the purchase of physical assets.

The only counterforce that could enter the market at the start of this week, however, is a resurgent USD versus its main rival, the EUR, if a Chinese revaluation becomes forestalled. If the dollar can continue to make gains this week, buyers may begin to temporarily shift out of oil purchases in favor of other assets. This is not to say oil prices will not continue to climb, only that the climb will get delayed by another couple trading days. Traders will be eyeing further events in the Middle East this week as the risk of crude oil supply disruptions could continue to spread throughout the region, especially as protests in Syria become more volatile as they have been lately.


Technical News

EUR/USD

A bearish cross has formed on the daily chart's Stochastic Slow, indicating that a bearish correction could take place in the near future. This theory is supported by the Relative Strength Index on the 8-hour chart, which is currently in overbought territory. Traders may want to short their positions today.

GBP/USD

The Williams Percent Range on the daily chart has just crossed into the overbought zone, indicating that a bearish correction may occur shortly. Furthermore, the Relative Strength Index on the daily chart is currently at 80, lending further support to the theory will correct itself. Going short with tight stops may be the wise choice today.

USD/JPY

While the daily chart's Relative Strength Index is currently in the oversold zone, indicating that an upward correction is approaching, most other indicators show this pair in neutral territory. Traders may want to take a wait and see approach today, as a clearer picture is likely to present itself later on.

USD/CHF

This pair has been trading fairly steadily since late last week. Technical indicators are currently showing that this trend is likely to continue today. Traders will want to pay attention to the Relative Strength Index and the Stochastic Slow on the hourly charts. Any sharp movements may indicate an impending price shift.

The Wild Card

NZD/USD

The Relative Strength Index on the 8-hour chart has just crossed into the overbought zone, indicating that downward pressure may occur in the near future. This theory is supported by the Stochastic Slow on the daily chart which has formed a bearish cross. Forex traders may want to open up sell positions in order to take advantage of the impending downward correction.

Current Time: 04/17 12:30 GMT
# Time $€£¥ Event Per. Prev. Fore. Act. Imp.
04/17
13:30CAD+ Core CPI m/m0.7%0.3%-5
13:30CAD+ CPI m/m0.8%0.4%-3
13:30USD+ Unemployment Claims 300K316K-5
15:00USD+ Philly Fed Manufacturing Index9.09.6-5
15:30USD+ Natural Gas Storage 4B35B-1
00:50JPY+ Tertiary Industry Activity0.9%0.2%-3
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