The euro largely remained within reach of its recent two-month low against the US dollar throughout yesterday's trading session, as investors eagerly awaited news regarding the next round of the Greek bailout package. A lack of significant international economic news resulted in other higher yielding currencies and commodities range trading for much of the day. Today, the attention is likely to shift from Greece to Germany, as the German ZEW Economic Sentiment figure is set to be released. A worse than expected figure could result in the euro taking heavy losses during morning trading.
USD - Dollar Continues to Benefit from Risk Aversion
While the US dollar failed to make any significant
advances against its main currency rivals yesterday, it was able to hold onto
virtually all of its gains from last week, as risk aversion continued to boost
safe-haven currencies. The USD/CHF traded as high as 0.9488 during the morning
session yesterday, just below the two-month high of 0.9492 hit last week. The
pair eventually saw a minor downward correction before stabilizing at the
0.9475 level. The GBP/USD fell as low as 1.5868 during the mid-day session to
reach a more than two-month low.
Today, a lack of significant US news means that any dollar movements are likely to occur as a result of announcements out of the euro-zone. Traders will want to carefully monitor any developments with regards to Greece's debt problems. Furthermore, German news is set to impact the marketplace. If any of the news signals a further slowing down in the euro-zone economic recovery, risk aversion among investors may help the greenback extend its recent bullish trend.
EUR - All Eyes on German Economic Sentiment Figure
The euro spent most of the day within reach of its
recent lows against both the US dollar and Japanese yen yesterday, as risk
aversion due to uncertainties in Greece and Spain continued to weigh down on
the common currency. After dropping more than 20 pips during the early morning
session to trade as low as 1.2702, the EUR/USD was able to bounce back later in
the day to reach the 1.2720 level. Against the yen, the euro fell some 20 pips
during early morning trading and spent the rest of the day trading around the
101.00 level, slightly above its recent one-month low.
Today, the main piece of euro-zone news is likely to be the German ZEW Economic Sentiment figure, set to be released at 10:00 GMT. Analysts are forecasting that the figure will come in at -10.1, slightly higher than last month's -11.5. If today's news comes in below its expected level, fears that the euro-zone debt crisis is spreading to the region's largest economy could result in heavy losses for the euro over the course of the day.
Gold - Gold Sees Minor Gains amid Global Economic Worries
Gold's status as a safe-haven asset in times of global
economic turmoil helped boost the value of the precious metal yesterday.
Concerns regarding the euro-zone slipping further into recession caused
investors to shift their funds to gold, which resulted in prices coming within
reach of $1737 an ounce during mid-day trading, just below a recent three-week
Today, gold traders will want to continue monitoring developments out of the euro-zone. Specifically, a German economic sentiment figure, set to be released at 10:00GMT, could provide important clues as to how bad the EU crisis is at this time. Worse than expected data could boost gold's safe-haven status, which may result in further bullish movement.
Crude Oil - Crude Oil Range Trades in Slow News Day
The price of crude oil saw relatively little movement
yesterday, largely due to the absence of significant international economic
indicators. Prices fell close to $0.60 a barrel during the first half of the
day to trade as low as $86.11 before bouncing back during afternoon trading. By
the end of the European session, oil was stable at $86.75.
Today, traders can anticipate substantially more volatility in the price of oil following the release of the German ZEW Economic Sentiment figure. Investors are very concerned that the euro-zone debt crisis is spreading to Germany. Should today's indicator come in below expectations, risk aversion may cause oil to turn bearish.
While the weekly chart's MACD/OsMA appears to be forming a bearish cross, most other long-term technical indicators show this pair range trading, making a definitive trend hard to predict. Traders may want to take a wait and see approach, as a clearer picture is likely to present itself in the near future.
The daily chart's Williams Percent Range has crossed into oversold territory, indicating that this pair could see an upward correction in the near future. Additionally, the Slow Stochastic on the same chart appears close to forming a bullish cross. Traders may want to open long positions for this pair.
A bearish cross on the weekly chart's Slow Stochastic indicates that this pair could see a downward correction in the coming days. Furthermore, the Williams Percent Range on the same chart appears to be approaching overbought territory. Traders may want to open short positions for this pair.
Most long term technical indicators place this pair in neutral territory, meaning that a defined trend is difficult to predict 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.