Error
  • JUser: :_load: Unable to load user with ID: 1801

ANALYSIS

EUR/USD Remains to Fall

The euro continued to fall against its central currency competitors yesterday, as traders remained careful about investing in riskier assets because of political ambiguity in the euro-zone. The EUR/USD fell to an additional three-month low throughout the afternoon session at 1.2929. Today traders should be ready for market instability, as important indicators from the UK and US are going to be released. Pay attention to the UK MPC Rate Statement, the US Trade Balance figure and a speech from Fed Chairman Bernanke. In case the news cause further pessimism in the global economic recovery, riskier currencies like the euro might go down even further.

Summary

USD - Safe Haven Dollar Spreads Gains amidst Euro-Zone Doubts

EUR - Risk Aversion Causes Further Euro Losses

Gold - Declining Demand Causes Fall in Gold Price

Crude Oil - Oil Continues to be Bearish Because of High US Inventories


Forex Market Trends – 10 May 2012

EUR/USD

GBP/USD

USD/JPY

USD/CHF

AUD/USD

EUR/GBP

Daily Trend

up

up

up

down

up

up

Weekly Trend

down

down

down

up

down

down

Resistance

1.3082

1.6233

80.59

0.9376

1.0259

0.8148

1.3015

1.6191

80.33

0.9335

1.0203

0.8120

1.2995

1.6163

80.01

0.9302

1.0168

0.8097

Support

1.2948

1.6120

79.69

0.9269

1.0098

0.8047

1.2910

1.6093

79.42

0.9238

1.0065

0.8009

1.2875

1.6050

79.04

0.9207

1.0014

0.7976

Economic News

USD - Safe Haven Dollar Extends Gains amid Euro-Zone Worries

An absence of news events yesterday helped the dollar continue its recent bullish trend, as the political doubt in the euro-zone following latest elections in France and Greece caused investors to keep their funds with safe haven assets. The AUD/USD fall close to 70 pips during the day, reaching as low as 1.0031. The GBP/USD fell close to 90 pips, reaching as low as 1.6066 before recovering somewhat to 1.6090. That being said, the news was not all positive for the dollar. The USD/JPY continued to fall throughout the day, reaching as low 79.42.

Today dollar traders will want to pay attention to a batch of US news scheduled to be released over the course of the day. At 12:30 GMT, the latest Trade Balance and Unemployment Claims figures will be announced. With both forecasted to come in worse than their previous readings, the dollar may continue to slide against the JPY. At 13:30, all eyes will be on a speech from Fed Chairman Bernanke. Any indications in the speech that the Fed will initiate a new round of quantitative easing in the near future could lead to additional losses for the dollar against other safe-haven currencies. 

EUR - Risk Aversion Leads to Additional Euro Losses

The euro extended its downward trend yesterday, as fears of additional turmoil in the euro-zone prevented investors from shifting their funds to riskier assets. In addition to the EUR/USD, which dropped to a fresh three-month low during the European session, the common currency also tumbled against the JPY and GBP. The EUR/JPY fell close to 100 pips, reaching as low as 102.89 during afternoon trading. After seeing moderate gains earlier in the day, the EUR/GBP once again turned bearish during the afternoon and fell below the 0.8030 level.

Turning to today, euro traders will want to pay attention to the French Industrial Production figure, scheduled for 06:45 GMT, followed by the ECB Monthly Bulletin at 08:00. Analysts are forecasting a steep drop in the French production figure over last month. If true, it could result in further risk aversion in the marketplace which may lead to additional euro losses during mid-day trading. Later in the day, a speech from Fed Chairman Bernanke may generate volatility for the EUR/USD pair. Any signs that the Fed may initiate a new round of quantitative easing could help the euro recover some of its recent losses against the greenback.

Gold - Weakened Demand Leads to Drop in Price of Gold

The price of gold fell throughout the day yesterday, as risk aversion in the marketplace caused investors to turn bearish toward the precious metal. Additionally, a weak euro made gold more expensive for international buyers which in turn led to a drop in price. Gold declined over $15 an ounce, reaching as low as 1580.20 during European trading.

Today, analysts are warning that gold still has more room to fall as long as investors remain worried regarding euro-zone economic growth prospects. That being said traders will want to pay attention to several US indicators set to be released during the afternoon session. Should any of them cause the USD to reverse its current bullish trend, gold may be able to recoup some of its recent losses.

Crude Oil - Oil Remains Bearish Due to High US Inventories

The price of crude oil extended its bearish run yesterday, as near record high stockpiles of the commodity in the US signaled weakened demand in the world's largest oil consuming country. The price of crude dropped close to $2 a barrel over the course of European trading, reaching as low as $95.16.

Turning to today, traders will want to pay attention to a batch of US news. Should any of it come in below expectations, the dollar could reverse its current bullish trend, in which case the price of oil may be able to rebound during the afternoon session. That being said, with investors preoccupied with the political situation in Europe, any impact the US news has may be limited. 

Technical News

EUR/USD

A bullish cross on the daily chart's Slow Stochastic indicates that this pair could see upward movement in the near future. This theory is supported by the Williams Percent Range on the same chart, which has dropped into oversold territory. Going long may be a wise choice for this pair going into the rest of the week.

GBP/USD

The daily chart's Bollinger Bands are beginning to narrow, indicating that this pair could see a price shift in the near future. Furthermore, a bearish cross on the weekly chart's Slow Stochastic indicates that this pair could see downward movement in the coming days. This may be a good time to open short positions ahead of a possible downward breach.

USD/JPY

Long term technical indicators are providing mixed signals for this pair. While the daily chart's Williams Percent Range is in oversold territory, meaning that upward movement could occur, the weekly chart's MACD/OsMA has formed a bearish cross. Taking a wait and see approach may be the wise choice for this pair.

USD/CHF

A bearish cross on the daily chart's Slow Stochastic indicates that this pair could see downward movement in the near future. This theory is supported by the Williams Percent Range on the weekly chart, which has just crossed over into overbought territory. Going short may be the wise choice for this pair.