EUR Bullish Ahead of German News
The euro was largely able to retain last week's gains throughout the day yesterday, as a slow news day resulted in relatively little movement in the marketplace. The USD/JPY saw minor upward movement yesterday, as investors grew fearful that the Bank of Japan may soon act to limit the yen's recent bullish trend. Today, traders will want to pay attention to euro-zone news, specifically the German ZEW Economic Sentiment at 9:00 GMT. A better than expected figure could help boost optimism in the euro-zone economic recovery and help the common-currency extend its gains.
USD – Dollar Remains Bearish
The dollar was able to stage a slight recovery against several of its main currency rivals yesterday, even though analysts were quick to warn that given the current state of the US economy, any gains were likely to be temporary. The USD/CHF gained close to 40 pips during the first part of the day to reach as high as 0.9295, before correcting itself and dropping to the 0.9280 level. The USD/JPY advanced more than 20 pips to trade as high as 78.38 in mid-day trading.
Today, the USD could see some volatility when a German economic sentiment indicator is released at 9:00 GMT. Any better than expected news could lead to risk taking among investors, which may result in the safe-haven dollar extending its bearish trend. Later in the week, traders will want to make sure to pay attention to US home sales and manufacturing data. Any better than expected news could help the dollar following last week's extreme downward movement.
EUR – EUR Starts Week with Slight Losses
The euro traded relatively steady throughout yesterday's trading session, as investor hopes that the euro-zone may finally be able to overcome its debt-crisis continued to boost the currency. While the EUR/USD took moderate losses when markets opened for the week, the pair was able to stabilize around the 1.3100 level for most of the day. Against the British pound, the euro fell around 40 pips during early morning trading, but was able to remain well above the psychologically significant 0.8000 level.
Today, euro traders will want to pay close attention to the German ZEW Economic Sentiment figure. As the strongest economy in the euro-zone, economic data out of Germany tends to have a larger than usual impact on the marketplace. If the news comes in above the forecasted -19.4, the euro could reverse yesterday's losses. That being said, worse than expected news could result in a loss of confidence in the euro-zone economic recovery, which may lead to bearish movement for the euro.
Gold – Gold Trades Steadily Near 6-Month High
While the price of gold took moderate losses when markets opened for the week, the precious metal spent most of the day within reach of its highest level in more than six-months. Prices dropped close to $8 an ounce during the first part of the day to reach the $1767 level. A slight upward correction brought the gold to $1770.
Today, gold traders will want to pay attention to news out of the euro-zone. Any better than expected economic data could generate risk taking among investors, which may help boost gold prices going into the rest of the week. At the same time, traders will want to remember that if the news comes in below expectations, safe-haven currencies could receive a boost which may lead to gold turning bearish.
Crude Oil – Crude Oil Takes Moderate Losses in Slow Trading Day
After hitting a four-month high last week, crude oil took slight losses during European trading yesterday as a lack of significant news led to a slow trading day. The commodity fell $0.70 during the first part of the day to reach as low as $98.86 a barrel. An upward correction followed and crude was able to spend most of the rest of the day above the $99 level.
Today, crude could see some upward movement if a German economic sentiment figure comes in above expectations and generates risk taking among investors. Later in the week, oil traders will want to pay attention to several important US indicators. Any better than forecasted news out of the US could lead to speculations that American demand for oil may go up, which would help oil extend its bullish trend.
The Williams Percent Range on the weekly chart has crossed into overbought territory, signaling that a downward correction could occur in the coming days. Furthermore, the Slow Stochastic on the same chart appears close to forming a bearish cross. Going short may be the best choice for this pair.
A bearish cross on the weekly chart's Slow Stochastic indicates that this pair could see downward movement in the near future. In addition, the Relative Strength Index on the daily chart has crossed into the overbought zone. Going short may be the best choice for this pair.
While a bullish cross has formed on the daily chart's MACD/OsMA, most other long term technical indicators place this pair in neutral territory. Traders may want to take a wait and see approach, as a clearer picture is likely to present itself in the near future.
The weekly chart's Williams Percent Range is in oversold territory, indicating that this pair could see upward movement in the coming days. Furthermore, the daily chart's Slow Stochastic has formed a bullish cross. Traders may want to open long positions for this pair.
The Wild Card
The Williams Percent Range on the daily chart has crossed into the overbought zone, indicating that a downward correction could occur in the near future. In addition, the Slow Stochastic on the same chart has formed a bearish cross. This gives forex traders a great opportunity to open short positions ahead of a possible downward correction.
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