Euro Remains Low Ahead of US Data Today
The euro sunk to a fresh two-month low against the US dollar yesterday, as ongoing uncertainties regarding the next round of Greek bailout funds caused investors to keep their funds with safe-haven assets. In addition, a significantly worse than expected German economic sentiment figure raised fears that the EU debt crisis is spreading to the region's largest economy. Today, a batch of US news is set to create volatility in the marketplace. Traders will want to pay attention to the Core Retail Sales, Retail Sales and PPI figures at 13:30 GMT, followed by the FOMC Meeting Minutes at 19:00.
USD – Retail Sales Data May Weaken Dollar Today
While ongoing concerns with the EU debt crisis helped the US dollar hold onto most of its recent gains vs. its higher-yielding currency rivals yesterday, a lack of significant news prevented the greenback from advancing significantly higher. Against the Swiss franc, the dollar fell around 25 pips during the morning session, eventually reaching as low as 0.9475, before bouncing back to the 0.9485 level later in the day. The USD/CAD gained just over 20 pips during European trading to reach as high as 1.0019 before dropping to the 1.0010 level.
Today, the dollar is likely to see significantly higher levels of volatility as a batch of key US news is set to be released. Traders will want to note the results of the Core Retail Sales, Retail Sales and PPI figures, which will all be released at 13:30 GMT. All three indicators are forecasted to come in well below last month's results. If the forecasts turn out to be true, confidence in the US economic recovery may decrease, which could weaken the dollar against some of its main rivals, including the JPY. Later in the day, the FOMC Meeting Minutes will likely provide important clues regarding the current state of the US economy.
EUR – After Brief Gains, EUR/USD Falls Back to 2-Month Low
A worse than expected German economic sentiment figure yesterday highlighted fears among investors that the EU debt crisis is spreading to the region's biggest economy. The news, combined with ongoing fears regarding Greek debt, kept the euro near a two-month low against the US dollar and a one-month low vs. the Japanese yen. After gaining just over 30 pips during the morning session, the EUR/USD proceeded to fall once again and spent most of the day around the 1.2700 level. The EUR/JPY was able to gain close to 70 pips during the first part of the day to trade as high as 101.13 before dropping to the 100.90 level.
Today, euro traders will want to continue monitoring developments with regards to the release of a new round of bailout funds in Greece. Additionally, an Italian 10-year bond auction is scheduled to take place during the mid-day session. Any indications that the euro-zone is sinking deeper into recession may result in the euro dropping to new multi-month lows against both the USD and JPY. That being said, if US news comes in below expectations, the euro's losses against the dollar could be limited.
Gold – Gold Stages Partial Recovery during European Trading
After taking moderate losses earlier in the week due to uncertainties with the global economic recovery, gold was able to partially recover some of its losses during European trading yesterday. The precious metal advanced more than $6 an ounce during mid-day trading, eventually reaching as high as the $1730 level.
Today, gold traders will want to monitor a batch of US news, specifically the Retail Sales and Core Retail Sales figure, set to be released at 13:30 GMT. The indicators are forecasted to come in significantly lower than last month's results. If true, gold's status as a safe-haven asset could receive a boost, which may help the precious metal continue advancing during afternoon trading.
Crude Oil – US News Could Weigh Down on Oil Today
The price of crude oil saw relatively little movement during European trading yesterday, as uncertainties regarding the global economic recovery made investors hesitant to open new positions. The commodity advanced close to $0.60 a barrel during morning trading to reach as high as $85.82, before falling back to the $85.55 level.
Today, US news is forecasted to create volatility in oil prices. America, the world's leading oil consuming nation, often plays a leading role in the direction oil prices take. If today's US Retail Sales and Core Retail Sales figures come in below expectations, fears that American demand for oil may decrease could result in the price of oil falling as well.
While the weekly chart's MACD/OsMA appears to be forming a bearish cross, most other long-term technical indicators show this pair range trading, making a definitive trend hard to predict. Traders may want to take a wait and see approach, as a clearer picture is likely to present itself in the near future.
The daily chart's Williams Percent Range has crossed into oversold territory, indicating that this pair could see an upward correction in the near future. Additionally, the Slow Stochastic on the same chart appears close to forming a bullish cross. Traders may want to open long positions for this pair.
A bearish cross on the weekly chart's Slow Stochastic indicates that this pair could see a downward correction in the coming days. Furthermore, the Williams Percent Range on the same chart appears to be approaching overbought territory. Traders may want to open short positions for this pair.
Most long term technical indicators place this pair in neutral territory, meaning that a defined trend is difficult to predict at this time. Traders may want to take a wait and see approach, as a clearer picture is likely to present itself in the near future.
The Wild Card
The Williams Percent Range on the daily chart has crossed over into overbought territory, indicating that this pair could see a downward correction in the near future. Furthermore, the Slow Stochastic on the same chart has formed a bearish cross. This may be a good time for forex traders to open short positions ahead of possible downward movement.
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