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ANALYSIS

Euro Improves Up On Positive Debt Auction

The euro staged a slight recovery against the US dollar yesterday, following a successful Dutch debt auction which calmed investor fears regarding the recent political turmoil in Holland. After tumbling over 100 pips earlier in the week, the EUR/USD was once again above the 1.3200 level during the afternoon session. Turning to today, traders will want to pay attention to US news, including the FOMC Statement, FOMC Economic Projections and FOMC Press Conference. Any mention of future quantitative easing measures could cause the US dollar to take losses during the second half of the week.

Summary

USD - FOMC Economic Projections Could Lead to Market Volatility

EUR - EUR Gains Viewed as Temporary

Gold - Gold Benefits from Bearish Dollar

Crude Oil - Positive Euro-Zone News Leads to Gains for Oil


Forex Market Trends – 24 April 2012

EUR/USD

GBP/USD

USD/JPY

USD/CHF

AUD/USD

EUR/GBP

Daily Trend

up

up

down

up

up

down

Weekly Trend

down

up

down

up

down

down

Resistance

1.3306

1.6182

82.42

0.9233

1.0432

0.8236

1.3252

1.6155

81.91

0.9178

1.0383

0.8218

1.3219

1.6120

81.60

0.9144

1.0353

0.8204

Support

1.3167

1.6049

81.09

0.9089

1.0304

0.8172

1.3134

1.6022

80.76

0.9054

1.0273

0.8143

1.3080

1.5979

80.28

0.8999

1.0225

0.8125

Economic News

USD - FOMC Economic Projections Could Lead to Market Volatility

The US dollar saw slight bearish movement yesterday, following positive euro-zone news that led to an increase in risk taking in the marketplace. The EUR/USD gained around 70 pips during the European session before stabilizing around the 1.3200 level. Against the Australian dollar, the greenback also lost around 75 pips for the day. The AUD/USD reached as high as 1.0320 during the afternoon session and eventually stabilized around 1.0300. 

Turning to today, a batch of US data is forecasted to create volatility in the marketplace. The FOMC Statement, FOMC Economic Projections and FOMC Press Conference, schedule for 16:30, 18:00 and 18:15 GMT, may result in further dollar losses should they mention a new round of quantitative easing in the US. In addition, traders will also want to pay attention to the US Core Durable Goods Orders figure, scheduled for 12:30 GMT. Analysts are forecasting the figure to come in well below last month's result. If true, the dollar could see losses against currencies like the Japanese yen and Swiss franc. 

EUR - EUR Gains Viewed as Temporary

The euro reversed some of its losses from earlier in the week during yesterday's trading session, as investors reacted positively to a Dutch debt auction. The news helped calm investor fears regarding the political situation in Holland. Earlier in the week, elections were called in the country after a failure to agree on a set of budget cuts. The euro gained 70 pips against the USD following the news, peaking at 1.3217 before staging a slight downward correction. Against the British pound, the euro was up over 40 pips. The EUR/GBP rose as high as 0.8185 during afternoon trading. 

Turning to today, traders will want to continue monitoring developments out of the euro-zone, particularly with regards to the upcoming elections in France. The current President lost the first round of elections earlier this week. Any signs that the opposition could take control after the second round of voting on May 6th could result in the euro turning bearish. Furthermore, a batch of potentially significant US data is set to be released throughout the day. Any positive developments regarding the US economic recovery could result in the euro reversing yesterday's gains. 

Gold - Gold Benefits from Bearish Dollar

Gold steadily increased in value throughout yesterday's trading session after a successful Dutch debt auction turned the USD bearish against the euro. Typically the price of gold becomes bullish when the dollar drops in value, as it makes the precious metal cheaper for international buyers. Gold reached as high as $1648.83 an ounce yesterday before moving downward and stabilizing at $1642.34. Overall, gold was up close to 850 pips for the day. 

Turning to today, traders will want to keep an eye on US economic indicators scheduled to be released throughout the day. Any signs that US interest rates could be increased earlier than expected could result in significant gains for the dollar, which may cause gold to turn bearish. At the same time, should today's news indicate that the Fed may initiate another round of quantitative easing in the coming months, the dollar could move further downward, in which case gold could extend yesterday's upward trend. 

Crude Oil - Positive Euro-Zone News Leads to Gains for Oil

A successful debt auction out of the Netherlands yesterday resulted in moderate risk taking in the marketplace, which in turn caused crude oil to increase in value. The price of crude was up just over $1 for the day, peaking at $104.08 a barrel before reversing. Eventually the price stabilized around the $103.75 level.

Turning to today, oil traders will want to pay close attention to the US Crude Oil Inventories figure at 14:30 GMT, followed by FOMC Statement at 16:30. Analysts are predicting that the inventories figure will come in at 2.7M, below last week's result of 3.9M. If true, investors may take it as a sign of increased demand in the US, which could result in oil prices going up. 

With regards to the FOMC Statement, any mention of another round of quantitative easing may lead to a drop in the value of the USD, which could also lead to an increase in the price of oil. That being said, should the statement discuss a future increase in US interest rates, oil prices may fall. 

Technical News

EUR/USD

The daily chart's Slow Stochastic appears to be forming a bearish cross, indicating that downward movement could occur in the near future. This theory is supported by the Williams Percent Range on the same chart which has crossed into overbought territory. Traders may want to go short in their positions.

GBP/USD

The weekly chart's Williams Percent Range has crossed into overbought territory in a sign that this pair could see a bearish correction in the coming days. In another sign that downward movement may occur, the daily chart's Relative Strength Index is moving up and may cross into the overbought region shortly. Traders may want to go short in their positions.

USD/JPY

Most long term technical indicators show this pair trading in neutral territory, meaning that no definitive trend is known at this time. That being said, the daily chart's MACD/OsMA has formed a bullish cross. Traders will want to keep an eye on other indicators on this chart, as they may provide further clues as to a possible impending upward correction.

USD/CHF

A bullish cross on the daily chart's Slow Stochastic appears to be forming, in a sign that upward movement could occur in the near future. In addition, the Williams Percent Range on the same chart is currently at -80, right on the border of being in oversold territory. Going long may be the preferred strategy for this pair.