German Data Set to Generate Euro Volatility Today
After taking moderate losses during overnight and early morning trading yesterday, the euro was able to resume its upward trend later in the day. The common-currency?s bullish movement came largely as a result of risk taking due to recent monetary easing actions taken by the US Federal Reserve. As markets get ready to close for the weekend, traders will want to pay attention to the German Flash Manufacturing PMI, set to be released at 08:30 GMT, with a better than expected result likely to help the euro further.
Economic News
USD ? US Core CPI May Impact Dollar Pairs Today
The US dollar was able to resume its recent bullish trend against the Japanese yen yesterday, amid speculations that the Bank of Japan will initiate a new round of monetary easing following elections this Sunday. The USD/JPY gained close to 20 pips during the European session to trade as high as 83.52. After losing some 30 pips against the British pound during the first part of the day, the greenback was able to stage a modest recovery following a better than expected US Unemployment Claims figure. The GBP/USD fell some 15 pips after the unemployment report was released, eventually reaching as low as 1.6128.
Today, dollar traders will want to keep an eye on the US Core CPI figure, scheduled to be released at 13:30 GMT. Should the figure come in above the forecasted 0.2%, the dollar could see additional gains vs. currencies like the GBP and JPY before markets close for the weekend. Conversely, a worse than expected CPI result may result in dollar losses. Additionally, attention should be given to a batch of euro-zone news. Risk taking could weigh down on the greenback if any of the indicators come in above their predicted levels.
EUR ? German Indicators Poised to Give Euro Additional Boost
The euro resumed its upward trend during mid-day trading yesterday, as investor risk taking combined with the announcement of a new round of quantitative easing in the US boosted higher-yielding assets. The EUR/USD gained more than 40 pips toward the end of European trading, eventually reaching 1.3085, just below a one-week high. Against the British pound, the common-currency also came within reach of a one-week high after gaining some 20 pips to trade as high as 0.8110.
Today, euro traders will want to pay attention to several German indicators, specifically the Flash Manufacturing PMI and Flash Services PMI. Earlier in the week, the euro saw significant gains following a better than expected German ZEW Economic Sentiment figure. If either of the German indicators shows growth in the euro-zone?s biggest economy today, the euro could see additional gains before markets close for the weekend.
Gold ? Gold Reverses Earlier Losses
After tumbling more than $30 an ounce earlier in the week, gold prices were able to stage a modest recovery during afternoon trading yesterday. Analysts attributed the bullish movement to the euro?s gains vs. the USD, which made gold cheaper for international buyers. By the end of European trading, the precious metal was trading just below the $1700 level.
Today, gold traders will want to pay attention to a batch of German news, set to be released at 08:30 GMT. Should the news result in further gains for the EUR/USD, gold could see additional gains during mid-day trading.
Crude Oil ? Crude Oil Gains amid Risk Taking
The price of crude oil was able to gain more than $0.60 a barrel during mid-day trading yesterday, following the release of a better than expected US Unemployment Claims figure, which signaled further improvements in the US labor sector. By the end of European trading, the commodity was trading at the $86.70 level.
As markets get ready to close for the weekend, oil traders will want to pay attention to the US Core CPI figure, set to be released at 13:30 GMT. If the indicator comes in above the forecasted 0.2%, oil prices could see advance further during the afternoon session.
Technical News
EUR/USD
The Bollinger Bands on the weekly chart are narrowing, indicating that this pair could see a price shift in the coming days. Furthermore, the Williams Percent Range on the same chart is approaching the overbought zone, signaling that the shift could be downward. Traders may want to open short positions for this pair.
GBP/USD
While the Relative Strength Index on the daily chart is approaching the overbought zone, most other long-term technical indicators show this pair range trading. Taking a wait and see approach may be the best choice at this time, as a clearer picture is likely to present itself in the near future.
USD/JPY
Both the Williams Percent Range and Relative Strength Index on the weekly chart are currently in overbought territory, signaling that this pair could see a downward correction in near future. Furthermore, the Slow Stochastic on the same chart is close to forming a bearish cross. Opening short positions may be the best choice for this pair.
USD/CHF
The daily chart?s Bollinger Bands are narrowing, indicating that a price shift could occur in the near future. Furthermore, the Williams Percent Range on both the daily and weekly charts is approaching the oversold zone, signaling that the shift could be bullish. Opening long positions may be the smart choice for this pair.
The Wild Card
USD/MXN
The Williams Percent Range on the daily chart has dropped into oversold territory, indicating that an upward correction could occur in the near future. Furthermore, a bullish cross has formed on the same chart?s Slow Stochastic. This may be a good time for forex traders to open long positions ahead of possible upward movement.
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