The euro had another bearish day yesterday, following the release of worse than expected German economic indicators during the morning session. The news led to fears that the euro-zone's biggest economy may be slipping into recession, which caused investors to shift their funds away from the common currency. Today, news out of the US is likely to generate market volatility. Traders will want to pay attention to the Core Durable Goods Orders and Unemployment Claims figures at 12:30 GMT, followed by the Pending Home Sales at 14:00.
Forex Market Trends – 25 October 2012
The US dollar had a relatively slow trading
day yesterday, despite better than expected US housing data which helped boost
investor confidence in the American economic recovery. The USD/JPY was able to
gain close to 15 pips during the first part of the day to trade as high as
79.87, slightly below Monday's three-month high of 80.02. Against the Swiss
franc, the greenback advanced more than 40 pips during the morning session
before staging a downward correction later in the day. The USD/CHF stabilized
around 0.9335 by the end of European trading.
Today, dollar traders will want to focus their attention on a batch of US news set to be released during mid-day trading. Specifically, the Unemployment Claims, Core Durable Goods Orders and Pending Home Sales figures all have the potential to create significant market volatility. With analysts predicting all three indicators to show clear improvements in the US economy, the greenback could see gains against its main currency rivals during the second half of the day.
A worse than expected German Flash
Manufacturing PMI and Ifo Business Climate generated fears that the euro-zone's
biggest economy may be nearing recession. As a result, the euro fell against most
of its main currency rivals throughout the day. Against the US dollar, the
common currency dropped 70 pips during morning trading to trade as low as
1.2917. An upward correction later in the day brought the euro to the 1.2955
level. The EUR/GBP fell some 50 pips to trade as low as 0.8076 before bouncing
back to the 0.8085 level toward the end of the European session.
Turning to today, the euro could see additional volatility as a result of a batch of US news set to be released over the course of the day. Any better than expected data may result in the common currency extending yesterday's losses against the greenback. Additionally, euro traders will want to pay attention to announcements out of the euro-zone which could better describe the current state of the region's economies. Negative comments from EU officials might result in further losses for the euro.
Despite a slight boost during morning
trading yesterday due to positive Chinese news, gold was not able to maintain
its upward momentum and once again turned bearish during the second half of the
day. After reaching as high as $1712 an ounce during mid-day trading, the
precious metal began falling and by the end of the European session reached as
low as $1700.
Today, gold traders will want to monitor news out of the US and how it affects the US dollar. Should the dollar see bullish movement over the course of the day, gold may become more expensive for international buyers which could result in further bearish movement.
Crude oil fell for the fifth day straight
yesterday, as disappointing euro-zone news combined with a significantly higher
than expected US Crude Oil Inventories figure led to concerns that global
demand will decrease. The commodity dropped more than $1.80 a barrel to trade
as low as $85.40 by the end of European trading.
Today, oil may be able to recoup some of its recent losses when a batch of US news is released. Any better than expected news could lead to speculations that demand for oil in the US will increase, which may boost prices as a result. Conversely, should the US indicators disappoint, the price of crude could decline further.
The weekly chart's Williams Percent Range is currently in overbought territory, signaling that this pair could see a downward correction in the coming days. This theory is supported by the same chart's Slow Stochastic, which has formed a bearish cross. Traders may want to open short positions for this pair.
The Relative Strength Index on the weekly chart is approaching the overbought zone. Furthermore, the MACD/OsMA appears close to forming a bearish cross. Traders will want to keep an eye on both of these indicators, as they may signal a possible downward correction in the near future.
The daily chart's Slow Stochastic has formed a bearish cross, indicating that this pair could see downward movement in the near future. Additionally, the Relative Strength Index on the same chart is in overbought territory. Going short may be a wise choice for this pair.
The MACD/OsMA on the daily chart has formed a bullish cross, indicating a possible upward correction in the near future. Additionally, the weekly chart's Williams Percent Range has crossed into oversold territory. Opening long positions may be the smart choice for this pair.