The euro gave up some of its recent gains against its main currency rivals yesterday, as investors remained concerned about what actions the ECB can take to lower borrowing costs in Spain and Italy. Today, traders will want to pay attention to the US CB Consumer Confidence figure, set to be released at 14:00 GMT. Analysts are forecasting today’s news to come in below last month’s, which if true, could signal to investors that the US economic recovery is slowing down and may result in the euro recouping yesterday’s losses against the greenback.
USD – Consumer Confidence Figure May Result in Dollar Losses
The dollar had a mixed trading day yesterday, as a return to risk aversion resulted in gains against higher yielding currencies including the Swiss franc, while a pessimistic outlook on the US economic recovery led to losses against the Japanese yen. The USD/CHF peaked at 0.9822 after having advanced close to 60 pips during European trading. The pair then staged a minor downward correction before stabilizing at 0.9795. Against the Japanese yen the dollar fell as low as 78.11 during mid-day trading, down close to 30 pips from the beginning of the European session.
Today, the main news event dollar traders will want to pay attention to is the US CB Consumer Confidence figure, set to be released at 14:00 GMT. American consumer confidence has steadily decreased since February of this year, contributing to the pessimistic outlook in the US economic recovery. With today’s news once again forecasted to come in below last month’s, the greenback could extend its recent bearish trend against safe-haven currencies, including the Japanese yen. Later in the week, traders will also want to remember that the all-important US Non-Farm Payrolls figure is set to be released, meaning that dollar volatility is likely to continue for the near future.
EUR – Investors Remain Cautious Regarding Possible ECB Action
The euro reversed some of its gains from last week, as investors remain cautious regarding the European Central Bank’s (ECB) ability to reduce Spanish and Italian borrowing costs. The EUR/USD fell just over 60 pips during the first half of European trading, eventually reaching as low as 1.2223 before staging a slight upward correction to trade at the 1.2250 level. Against the JPY, the common currency tumbled close to 90 pips to trade as low as 95.52, before correcting itself and stabilizing at the 95.85 level.
Turning to the rest of the week, investors are eagerly awaiting Thursday’s ECB Press Conference for details on possible actions the ECB is willing to take to combat the euro-zone debt crisis and to bring down Spanish and Italian borrowing costs. German opposition to large scale bond purchases may limit the ECB’s ability to boost the euro-zone economic recovery. Today, traders will want to pay attention to announcements out of the euro-zone. Any signs that Germany will act to limit bond purchases by the ECB could result in the euro extending yesterday’s losses.
Gold – Gold Begins Week on a Bearish Note
A weakened euro due to risk aversion in the marketplace caused the price of gold to fall during trading yesterday. That being said, its losses were relatively mild, and by the evening session was once again seeing upward movement. Gold fell as low as $1614.01 an ounce during mid-day trading, down close to $9 before staging an upward reversal to move up to the $1620 level.
Today, gold traders will want to continue monitoring developments in the euro-zone, particularly with regards to steps the ECB may take to combat Spain and Italy’s rising borrowing costs. Any positive developments could help the precious metal extend its recent upward trend.
Crude Oil – Crude Oil Slips Below $90 a Barrel
The price of crude oil fell below the psychologically significant $90 a barrel level yesterday, as risk aversion returned to the marketplace amid concerns about the ECB’s ability to combat the euro-zone debt crisis. Overall, the commodity fell just over $1 to trade as low as $89.39, before climbing to the $89.89 level.
Today, oil traders should pay attention to the US CB Consumer Confidence figure. Should the indicator come in below the forecasted 61.5, investors may take it as a sign that demand in the US, the world’s leading oil consuming country, is falling, which could result in losses for crude oil.
The Williams Percent Range on the weekly chart has crossed into the oversold zone, indicating that this pair could see upward movement in the near future. Furthermore, the Bollinger Bands on the daily chart are narrowing, signaling that a price shift could occur in the near future. Going long may be the smart choice for this pair.
A bullish cross appears to be forming on the weekly chart’s MACD/OsMA, signaling that an upward trend could occur in the coming days. That being said, most other technical indicators show this pair range trading. Traders may want to take a wait and see approach for this pair.
The Bollinger Bands on the daily chart are narrowing, indicating that this pair could see a price shift in the near future. Additionally, the Williams Percent Range on the weekly chart appears close to dropping into oversold territory. Traders will want to monitor the Williams Percent Range. Should it drop below the -80 level, it may be time to open long positions.
A bearish cross on the weekly chart’s Slow Stochastic indicates that this pair could see downward movement in the coming days. Furthermore, the Williams Percent Range on the same chart has crossed into overbought territory. Going short may be the wise choice today.
The Wild Card
The Williams Percent Range on the daily chart has dropped into oversold territory, indicating that this pair could see upward movement in the near future. Furthermore, the MACD/OsMA on the same chart has formed a bullish cross. This may be a good time for forex traders to open long positions.
Forex Market Analysis provided by ForexYard.
© 2006 by FxYard Ltd
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