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Thursday, 26 Jan 2012

Yen Tumbles Following Negative Japanese News

News that Japan logged its first annual trade deficit in over 30 years sent the JPY tumbling during yesterday's trading session. The USD/JPY shot up well over 100 pips, reaching above the 78.00 level. Meanwhile the EUR/JPY extended its bullish trend before staging a downward correction toward the end of the European session. Today, a batch of US news is forecasted to generate market volatility. Traders will want to pay particular attention to the US Unemployment Claims figure, as it will be an important gauge of the US economic recovery.

EUR/USDGBP/USDUSD/JPYUSD/CHFAUD/USDEUR/GBP
Daily Trendupupdowndownupup
Weekly Trendupupupdownupup
Resistance1.32001.574078.450.92951.07050.8455
1.31801.572078.250.92751.06850.8435
1.31501.569077.950.92451.06550.8405
Support1.30901.563077.350.91851.05950.8345
1.30601.560077.050.91551.05650.8315
1.30301.558076.850.91351.05450.8295

Economic News

USD - USD Turns Bullish Following EU News

The US dollar had a particularly strong day yesterday following negative news out of both Japan and the euro-zone. News that Japan has logged in a trade deficit for the first time since 1980 caused the USD/JPY pair to jump more than 100 pips throughout the day. Meanwhile, fresh concerns regarding Greece's sovereign debt drove EUR/USD down, virtually erasing gains made at the beginning of the week.

Meanwhile, investors largely shrugged off news that the US Federal Reserve is unlikely to hike interest rates until the beginning of 2014. The dollar has found significant support as of late, largely because of negative international indicators. Investors continue to view the USD as a safe-haven asset. With the euro-zone still in extremely fragile position, traders can expect the dollar to remain at its current level for the near future.

Turning to today, a batch of news out of the US may generate significant market volatility. Traders will want to pay attention to this week's Unemployment Claims figure and the most recent New Home Sales report for clues as to the state of the US economic recovery. With both indicators predicted to come in positive, the greenback may be able to extend its current bullish run as we begin to close out the week.

EUR - EUR Erases Gains vs. USD

The euro gave back most of its recent gains against the US dollar in trading yesterday, as negative news out of Greece once again drove investors to safe-haven assets. Greece's inability to reach a debt swap agreement with its creditors has overshadowed otherwise positive euro-zone economic indicators. As such, the EUR/USD once again dropped below the 1.3000 level, and analysts are warning that it will be hard for the pair to break the 1.3080 resistance level in the near term.

Today, traders will once again want to pay attention to any announcements out of the euro-zone with regards to the Greek debt situation. Additionally, any news on Portugal, which is now viewed as the most likely to default on its debt after Greece, could impact euro pairs. US news may also generate market volatility, with this week's Unemployment Claims figure most likely to impact the EUR/USD pair.

JPY - Japanese Trade Deficit Turns JPY Bearish

Investors largely abandoned the JPY in trading yesterday, following news that Japan has logged a trade deficit for the first time in over 30 years. Increased demand for Japanese exports played a large part in the yen selloff. Questions regarding how long the country will be able to maintain its large public debt caused the currency to tumble. While the USD/JPY climbed above the 78.00 level, the EUR/JPY approached 102.00 during European trading before staging a slight reversal.

Today, the yen is not forecasted to stage a meaningful recovery. While Japan's status as a creditor country is not in danger at the moment, significant policy changes will have to be implemented to address the current situation. In the meantime, a bearish yen appears to be on the horizon.

Crude Oil - Crude Oil Continues To Sink Following Global News

The price of crude oil continued to fall yesterday, following negative European and Japanese news that drove investors to safe-haven assets like the US dollar. Typically, riskier assets like crude oil fall when the USD increases in value and the commodity becomes less affordable for international investors. As a result, crude dropped below the $98 a barrel level during European trading.

Turning to today, traders will want to pay attention to a batch of US data which could impact USD pairs. Should any of the data come in below expectations, the dollar may move down as a result, which would likely support the price of crude oil as we begin to close out the trading week.

Technical News

EUR/USD

Technical indicators are showing that this pair has entered the overbought zone and may see a downward correction. The daily chart's Williams Percent Range has hit the -20 level, indicating that a downward breach could occur. Traders may want to go short in their positions.

GBP/USD

A bearish cross has formed on the daily chart's Stochastic Slow, indicating that a downward correction may take place in the near future. In addition, the Williams Percent Range on the same chart is well above the -20 level and pointing down. Going short may be the preferable choice for now.

USD/JPY

Following the spike the pair saw in recent trading, technical indicators are now showing that a downward correction could take place in the near future. The 8-hour chart's Relative Strength Index is already well into the overbought zone, while the Stochastic Slow has formed a bearish cross. Short positions may be preferable.

USD/CHF

Most technical indicators are showing this pair range trading, meaning that no defined trend is forecasted at the moment. Traders will want to pay attention to the technical indicators on the daily chart, as a better picture is likely to present itself in the near future. Taking a wait and see approach for this pair is advised.

The Wild Card

Nasdaq 100

Following the steady bullish trend the Nasdaq has seen in recent days, technical indicators are now showing that a bearish correction may take place in the near future. The daily chart's Williams Percent Range and Relative Strength Index have both drifted into overbought territory. Forex Forex traders may want to go short in their positions ahead of any downward correction.

Current Time: 10/23 14:19 GMT
# Time $€£¥ Event Per. Prev. Fore. Act. Imp.
10/23
15:00USD+ HPI m/m0.1%0.4%0.5%1
15:45USD+ Flash Manufacturing PMI57.557.2-3
16:00EUR+ Consumer Confidence-11-12-1
16:00USD+ CB Leading Index m/m0.2%0.8%-1
16:30USD+ Natural Gas Storage 94B97B-1
23:45NZD+ Trade Balance-472M-620M-5
10/24
01:00EUR+ EU Economic Summit---3
08:00EUR+ GfK German Consumer Climate8.38.1-3
10:00EUR+ Italian Retail Salesm/m-0.1%0.2%-1
10:30GBP+ Prelim GDP q/q0.9%0.7%-5
10:30GBP+ Index of Services 3m/3m1.0%0.9%-1
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