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ANALYSIS

Daily Forex Market Analysis - 03 July 2012

Investor doubts regarding the recent deal among euro-zone leaders caused the euro to start off the week on a bearish note against several of its main currency rivals. Opposition to parts of the agreement from Finland and the Netherlands led to concerns about whether the euro-zone will be able to assist debt ridden countries like, Spain and Italy. Turning to today, traders will want to continue monitoring developments in the euro-zone. Should there be any additional opposition to the latest plan to combat the region's debt crisis, the common currency could see additional losses.


Forex Market Trends – 03 July 2012

EUR/USD

GBP/USD

USD/JPY

USD/CHF

AUD/USD

EUR/GBP

Daily Trend

down

down

same

down

down

Weekly Trend

down

down

down

up

up

down

Resistance

1.2697

1.5814

80.61

0.9651

1.0353

0.8122

1.2643

1.5759

80.19

0.9596

1.0303

0.8081

1.2610

1.5724

79.93

0.9562

1.0272

0.8056

Support

1.2556

1.5669

79.51

0.9508

1.0223

0.8015

1.2523

1.5635

79.25

0.9474

1.0193

0.7990

1.2468

1.5579

78.83

0.9420

1.0142

0.7949

Economic News

USD - USD Falls vs. JPY Following Poor US News

The US dollar turned bearish against the Japanese yen during afternoon trading yesterday, following the release of a disappointing US ISM Manufacturing PMI. The news sent the USD/JPY down over 30 pips immediately following its release. The pair eventually found stability around the 79.40 level. The dollar had more luck against the euro, as investor doubts regarding a recent agreement among euro-zone leaders to combat the region's debt crisis resulted in risk aversion. The EUR/USD fell over 80 pips over the course of the day, eventually reaching the 1.2580 level.

Turning to today, a lack of significant US indicators means that any dollar movement is likely to be a result of euro-zone news. Traders will want to pay attention to announcements regarding the details of last week's agreement between EU leaders. Should it become clear that their plan is not feasible, investors may continue shifting their funds to safe-haven currencies, which could help the dollar against the euro and AUD during the European session. 

EUR - Euro Falls as Details of Euro-Zone Agreement Emerge

Opposition from Finland and the Netherlands regarding a recent agreement by EU leaders to establish a permanent bailout fund for debt-ridden countries in the region turned the euro bearish throughout the day yesterday. In addition to falling over 80 pips against the US dollar, the common currency also dropped more than 125 pips against the JPY. By the end of the European session, the EUR/JPY was trading below the psychologically 100.00 level. 

Today, euro traders will want to watch for additional developments regarding last week's pledge to bring down borrowing costs in the region. With opposition to the plan growing among more stable nations in the region, the euro could see further losses against the dollar and yen. Later in the week, attention should be given to the euro-zone Minimum Bid Rate. Analysts are forecasting that the ECB will cut interest rates by 0.25%, which if true, may result in additional euro losses. 

Gold - Gold Rebounds amid Disappointing US News

After falling during the first part of the day due to euro-zone worries, gold was able to rebound later in the day following a worse than expected US manufacturing PMI. The US news caused investors to shift their funds to gold, which is sometime considered a safe-haven asset. The precious metal advanced close to $10 an ounce during the afternoon session, eventually reaching above the $1600 level.

Today, gold traders will want to pay attention to the US dollar. Should the greenback continue to fall against safe-haven currencies, like the Japanese yen, investors may give the precious metal an additional boost. That being said, any disappointing euro-zone news could result in dollar gains, which may result in gold turning bearish once again. 

Crude Oil - Euro-Zone Worries Lead to Moderate Oil Losses

The price of crude oil fell by just over $1.50 a barrel yesterday, eventually reaching as low as $83.20, due to concerns among investors regarding last week's agreement among EU leaders to combat the euro-zone debt crisis. Opposition to the agreement from Finland and the Netherlands has led to risk aversion in the marketplace, which turned oil bearish.

Today, oil traders will want to pay attention to how the euro performs against the US dollar and yen. Should the common-currency continue to move downward, oil could extend its bearish trend as a result. At the same time, any upward movement by the euro could lead to short-term gains for crude. 

Technical News

EUR/USD

Most long-term technical indicators show this pair range-trading, meaning that no defined trend can be determined 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.

GBP/USD

While most long-term technical indicators place this pair in neutral territory, the MACD/OsMA appears to be forming a bullish cross. Traders will want to keep an eye on this indicator. Should the cross form, it may be a sign of impending upward movement.

USD/JPY

The Bollinger Bands on the weekly chart are narrowing at the moment, indicating that this pair could see a price shift in the coming days. Furthermore, the MACD/OsMA on the same chart appears to be forming a bearish cross. If the cross forms, it may be a good time to open short positions.

USD/CHF

Both the Williams Percent Range and Relative Strength Index on the weekly chart appear close to crossing into overbought territory. Traders will want to pay attention to these two indicators. If they continue going up, it may be a sign of an impending bearish correction.