The euro zone continues to face debt concerns resulting in mass buy-ins for USD safe-haven positions against its European counterparts. The EUR/USD was down from a weekly high of 1.3790 to close Friday at 1.3241. The combination of euro zone weakness and rising aggression from North Korea against its southerly neighbor has resulted in a resurgent greenback, which appears to be gaining ground on safe-haven bets.
USD – US Dollar Trading Higher from Korean Dispute
The US dollar has been trading higher since Friday against its primary currency counterparts. As tensions continue rising on the Korean peninsula, the Japanese yen appears to have turned downward against its safe-haven rival, the greenback. The USD/JPY was up at Friday’s close near the 84.10 price mark, up from 83.50 seen at the start of last week.
The euro zone continues to face debt concerns as well, resulting in mass buy-ins for USD safe-haven positions against its European counterparts. The EUR/USD was down from a weekly high of 1.3790 to close Friday at 1.3241. The combination of euro zone weakness and rising aggression from North Korea against its southerly neighbor has resulted in a resurgent greenback, which appears to be gaining ground on safe-haven bets.
With little news expected out of the United States today, the current trend of the greenback may hold for the time being. Traders should be on the lookout for the significant 1.3200 price mark on the EUR/USD as it tends to find significant support near this level. Likewise with the USD/JPY, the 84.50-60 price range historically puts significant pressure on the pair.
EUR – EUR Opens Higher, but Pares Gains as Debt Woes Persist
The news that Ireland has agreed to a bailout package sent the EUR for a ride in today’s early trading hours. The EUR/USD jumped at the opening of Asian trading with a 50 point bullish movement. The EUR/JPY experienced a similar movement of 40 pips in favor of the euro while against the British pound the 16-nation single currency moved only 30 pips upward.
However, concerns from the euro zone periphery continue as the details of the bailout have yet to be released and traders are still weary from the rising tensions between North and South Korea. The EUR appears to have rapidly pared its gains and is trading moderately lower than its opening price against the majority of its currency counterparts.
With few news events expected out of the euro zone today, the EUR may be sensitive to risk sentiment. Should China’s recent call for an emergency session on Korea falter, the region may undergo further volatility, pushing more investors into safe-havens, such as the US dollar. Traders may also want to pay attention to any releases which provide details regarding the Irish bailout as it will likely give further indications for broader measures throughout the region.
JPY – Korean Tensions Push Japanese Yen Lower vs. USD
Rising tensions between North and South Korea have pushed a number of Asian currencies lower as investors flee the assets of the region. The Japanese yen took a dive against its currency rivals in trading before last Friday’s close and appears to be continuing its bearishness as of this morning.
The USD/JPY was up over 60 pips on the week, opening near 83.50 and closing on Friday at the 84.10 price level. Against the British pound, however, the yen managed to pull weekly gains, dropping the pair to 131.12 from a high mark of 134.18. With some moderately significant reports emanating from Japan tonight, there is a possibility traders will see some volatility entering the forex market as Tuesday’s Asian session comes online.
Crude Oil – Oil Prices Expected to Range-Trade between $80-86 a Barrel
Oil prices continue to float between $80 and $86 a barrel. The commodity has been range-trading between these levels for the past two months and analysts are claiming that this behavior may remain unchanged this week. The reasons are due to the offsetting situation where the United States appears poised for growth whereas the euro zone continues to face debt concerns which will likely mute growth and decrease demand for oil.
The push and pull of these market forces is likely to hold oil prices within the current range. The latest trend of the US dollar may become a factor in today’s trading, however, since last Friday’s uptick in the USD may result in pushing oil prices down towards the $81.00 level later today. This is especially true as no significantly impactful news is expected from either the euro zone or the US today, which means current trends should continue.
After sustained downward movement the pair’s daily RSI and Stochastic (slow) appear to be showing strong indications of impending bullishness. The 1.3240 line represents a significant support level. A doji candlestick on the daily and weekly charts also supports the notion of an impending bullish correction. Traders may wish to go long today.
The price of this pair appears to be floating in the over-sold region on the daily RSI, suggesting a growth in bullish pressure. A recent bullish cross on the daily Stochastic (slow) supports this notion. Going long with tight stops may be today’s preferable strategy.
The daily RSI on this pair appears to be floating deep within the over-bought region, suggesting growing downward pressure. An impending bearish cross on the daily and weekly Stochastic (slow) support this notion strongly. Going short may be a wise decision today.
The daily Stochastic (slow) on this pair appears to be showing an immediately impending bearish cross, while the daily RSI floats in the over-bought region and looks to be descending. Going short with tight stops appears to be preferable today.
The Wild Card
The price of silver appears to be floating deep within the over-bought region on the weekly RSI, suggesting high bearish pressure. A series of recent bearish crosses on the weekly and daily Stochastic (slow) supports the notion of an imminent bearish movement. Forex traders may want to capture this impending movement by entering their short positions now and riding the downward wave.
Forex Market Analysis provided by ForexYard.
© 2006 by FxYard Ltd
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