EUR/USD Drops to 3-Week Low Following Greek News
The EUR/USD continued to fall during yesterday's trading session, as negative euro-zone news caused investors to revert back to safe-haven assets. The pair dropped below the psychologically significant 1.3000 level for the first time since January 25th. That being said, the euro staged a slight recovery after a better than expected US Unemployment Claims figure, which led to some risk taking. Today, traders will want to pay attention to US Core CPI figure. The figure is considered a valid indicator of economic health and may lead to market volatility.
USD – Dollar Gains on Yen Following Unemployment Figure
A better than expected US Unemployment Claims caused the USD to extend its bullish trend against the Japanese yen during yesterday's trading session. The first-time jobless claims figure came in at 348K, its lowest level in four years. The news sent the USD/JPY toward the psychologically significant 79.00 resistance level. At the same time, ongoing fears about whether Greece will receive a much needed bailout package sent the euro considerably lower against the greenback. The EUR/USD dropped below the 1.3000 level yesterday, to hit a three-week low.
Turning to today, traders will want to continue monitoring the situation in Greece for clues as to where risk appetite stands in the market. Any further negative news has the potential to send the EUR/USD significantly lower. Additionally, the US Core CPI figure, set to be released at 13:30 GMT, has the potential to boost the USD to close out the week. Analysts are predicting the figure will come in at 0.3%, which if true, would signal an increase over last month. Assuming the forecasts are correct, the USD could continue moving up against other safe-haven currencies.
EUR – EUR Continues to Fall amid Negative Greek News
The euro continued to fall against the US dollar throughout the trading day yesterday, as uncertainties about whether Greece would receive a much needed bailout package caused investors to revert back to safe-haven funds. The EUR/USD dropped as low as 1.2974, a three-week low, before staging a slight upward correction. Against the JPY, the common currency fell close to 60 pips before correcting itself during the US trading session.
Today, traders should note that any news regarding the Greek bailout is likely to lead to significant market activity. Analysts are still confident that Greece will receive a bailout needed to avoid defaulting on its debt, when euro-zone finance ministers meet on Monday. That being said, the euro is in a very fragile position. Any announcements out of the euro-zone that indicate that Greece could still default on its debt may lead to additional euro losses.
Traders will also want to pay attention to US news set to be released later today. Specifically, the Core CPI figure at 13:30 GMT may generate some market volatility. The euro managed to stage a slight correction in trading yesterday, after better than expected US news led to investor risk taking. There is a chance that if today's news comes in above forecasts, the common currency may be able to close the week on a bullish note.
JPY – Yen Takes Losses Following US News
Positive US news caused the safe-haven yen to take significant losses during trading yesterday. The better than expected US Unemployment Claims and Philly Fed Manufacturing Index led to investor risk taking throughout the evening session. The USD/JPY hit a 3 ½ month high before hitting significant resistance close to the 79.00 level. The EUR/JPY also saw gains as a result of the US news, despite the Greek debt crisis that continues to impact the common currency. The pair shot up some 50 pips after Unemployment Claims figure was released.
Today, traders will want to pay attention to another batch of US news. Specifically, the Core CPI figure is forecasted to generate movement in the market. Should the figure come in above expectations, the yen may take further losses to close out the week. That being said, should any additional negative euro-zone statements be released, investors may revert back to safe-haven currencies which could benefit the JPY.
Crude Oil – Crude Oil Maintains Upward Trend
Despite the Greek debt crisis, which has caused investors to abandon riskier assets, crude oil managed to stay above the psychologically significant $100 a barrel level throughout yesterday's session. Analysts attributed the commodity's bullish trend to ongoing tensions in the Middle East. Specifically, Iranian threats to limit oil exports have led to supply side fears among investors which have helped boost the price of oil.
Turning to today, traders will want to continue monitoring the situation in the Middle East, as it appears to be the driving force behind the price of oil. Any further escalation in rhetoric or actions on Iran's part could send oil far above its current levels. At the same time, should the Greek debt crisis lead to further investor risk-aversion, oil prices may drop to close out the week.
Following dramatic shifts in recent days, technical indicators are inconclusive as to what direction this pair is headed. The Stochastic Slow on the weekly chart has formed a bearish cross, indicating that downward movement could occur in the near future. At the same time, the Williams Percent Range is hovering in oversold territory. Traders may want to take a wait and see approach for this pair.
The daily chart's Bollinger Bands have begun to narrow, indicating that a major price shift could occur in the near future. The Stochastic Slow on the same chart has formed a bullish cross, which typically means upward movement could occur. Traders may want to open long positions ahead of a possible upward breach.
Most technical indicators place this pair in overbought territory, indicating that downward movement could occur in the near future. These include the Williams Percent Range on the weekly chart, which is currently at -10, and the Relative Strength Index on the daily chart, which has leveled out at 90. Traders may want to go short in their positions.
Most technical indicators on the daily and 8-hour charts place this pair in neutral territory, meaning that no major market shifts are expected to take place. That being said, the Williams Percent Range is slowly drifting into overbought territory. Traders will want to keep an eye on this indicator. If it goes above -20, the pair may see a downward reversal.
The Wild Card
The daily chart's Bollinger Bands are currently narrowing, indicating that a shift in price could occur in the near future. The Williams Percent Range on the same chart has dropped to the -90 level, indicating that the correction could be bullish. Forex traders may want to go long in their positions today ahead of a possible upward breach.
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