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ANALYSIS

Euro Unstable Due To Spanish Debt Auction

The euro turned bearish against virtually all of its main currency rivals yesterday, as risk aversion returned to the marketplace ahead of today's Spanish debt auction. Additionally, a positive UK Claimant Count Change figure led to a steep drop for the EUR/GBP. Today, in addition to the Spanish news, traders will want to monitor a batch of US news, including the Unemployment Claims and Existing Home Sales figures. Should any of the American news come in above expectations, the US dollar could see gains as a result.

Summary

USD - US Existing Home Sales May Lead to Dollar Gains

EUR - Spanish Debt Auction Forecasted to Generate Heavy Volatility

Gold - Gold Falls amid Euro-Zone Debt Fears

Crude Oil - Oil Turns Bearish Following US Inventories Figure


Forex Market Trends – 19 April 2012

EUR/USD

GBP/USD

USD/JPY

USD/CHF

AUD/USD

EUR/GBP

Daily Trend

same

up

up

same

down

down

Weekly Trend

up

up

up

same

same

down

Resistance

1.3195

1.6105

82.25

0.9245

1.0440

0.8265

1.3175

1.6085

82.05

0.9225

1.0420

0.8245

1.3145

1.6055

81.75

0.9195

1.0390

0.8215

Support

1.3085

1.5995

81.15

0.9135

1.0330

0.8155

1.3055

1.5965

80.85

0.9105

1.0300

0.8125

1.3035

1.5945

80.65

0.9085

1.0280

0.8105

Economic News

USD - US Existing Home Sales May Lead to Dollar Gains

The combination of worries regarding euro-zone debt and the Japanese trade deficit caused investors to shift their funds to the greenback during yesterday's trading session. The EUR/USD dropped close to 70 pips during the European session, reaching as low as 1.3057 before staging a slight upward correction. Meanwhile, the USD/JPY traded as high as 81.55 yesterday, up around 50 pips for the day. The pair did see some slight downward movement toward the evening session and eventually stabilized at 81.30.

Turning to today, all eyes will likely be on the Spanish long-term debt auction. Unless the auction goes smoothly, euro-zone debt fears are likely to dominate market sentiment which could cause the EUR/USD to tumble. In addition, the dollar could see some volatility against its other main currency rivals following the release of the US Unemployment Claims, Existing Home Sales and Philly Fed Manufacturing Index later in the day. Analysts are predicting positive results for all three indicators, which if true, could help the greenback extend yesterday's bullish trend.

EUR - Spanish Debt Auction Forecasted to Generate Heavy Volatility

The euro saw significant downward movement yesterday, as fears regarding the Spanish debt situation resurfaced leading to risk aversion. In addition to losses against the US dollar, the euro also tumbled vs. the JPY and GBP. The EUR/JPY dropped as low as 106.16 during the European session, down some 70 pips for the day. The British pound saw major gains against the euro, following a better than expected UK Claimant Count Change released earlier in the day. The EUR/GBP was down around 65 pips, reaching as low as 0.8173.

Today, the long-term Spanish debt auction is likely to be the highlight of the trading day. Analysts are warning that today's debt sale is likely to be significantly more difficult than Tuesday's. Should the sale not go smoothly, fears that the debt crisis could spread to other countries may lead to heavy euro losses. That being said, should today's news turn out to be positive risk taking may return to the marketplace, which could benefit the euro.

Gold - Gold Falls amid Euro-Zone Debt Fears

The price of gold fell throughout yesterday's trading session, as euro-zone news generated risk aversion in the marketplace. Gold prices have become heavily influenced by euro-zone news in recent weeks. Negative data has caused investors to abandon higher yielding assets, including gold, silver and platinum, in favor of safe-haven currencies like the US dollar. The precious metal fell as low as $1637.64 an ounce during afternoon trading, down from a high of $1654.10 earlier in the day.

Turning to today, the direction gold takes will likely be dependent on the Spanish debt auction. Any positive developments with regards to the Spanish debt crisis could help boost gold prices during the afternoon session. At the same time, analysts are forecasting that today's auction will be more difficult than the one earlier this week. If true, the price of gold could fall further.

Crude Oil - Oil Turns Bearish Following US Inventories Figure

Crude oil reversed some of its earlier gains during yesterday's trading session as a higher than forecasted US inventory figure signaled decreased demand in the world's largest oil consuming country. The US Crude Oil Inventories came in at 3.9M, well above the predicted figure of 1.5M. The price of oil dropped over $1 a barrel yesterday, reaching as low as $103.82 during the evening session.

Turning to today, oil traders will want to carefully monitor the results of the Spanish debt auction. Should the sale not proceed as smoothly as the one earlier this week, risk aversion is likely to return to the marketplace. In such a case, the price of oil is likely to extend yesterday's bearish trend.

Technical News

EUR/USD

In a sign that a price shift for this pair could occur in the near future, the Bollinger Bands on the weekly chart are narrowing. While most other technical indicators are currently in neutral territory, the MACD/OsMA on the same chart appears close to forming a bullish cross. Traders will want to keep an eye on this indicator, as it may be a sign of future upward movement.

GBP/USD

A bearish cross has formed on the daily chart's MACD/OsMA, indicating that this pair could see downward movement in the near future. In addition, the Williams Percent Range on the same chart is approaching overbought territory. Traders may want to go short in their positions, ahead of a possible downward correction.

USD/JPY

In a sign that this pair may see downward movement in the coming days, both the Relative Strength Index and Williams Percent Range on the weekly chart are moving toward overbought territory. Traders will want to keep an eye on both of these indicators. Should they continue moving up, it may be a sign of an impending bearish correction.

USD/CHF

Most long term technical indicators show this pair trading in neutral territory, meaning that no defined trend can be predicted at this time. Traders may want to take a wait and see approach, as a clearer trend is likely to present itself in the near future.