EUR/USD Bounces Back After Hitting 10-Day Low

After dropping to a 10-day low vs. the US dollar in overnight trading yesterday, the euro was able to stage a significant recovery during the European session yesterday. In addition, a better than expected US unemployment claims figure resulted in the USD to turn bullish against the Japanese yen. As markets get ready to close for the weekend, traders will want to pay attention to several potentially significant US indicators. The PPI, set to be released at 12:30 GMT, followed by the Prelim UoM Consumer Sentiment at 13:55 could both help the greenback extend its bullish trend vs. the yen.


Economic News

USD - US News Set to Generate Dollar Volatility

A significantly lower than expected US unemployment claims figure helped give the dollar a boost against its safe-haven currency rival, the Japanese yen, yesterday. The USD/JPY advanced close to 50 pips during the European session, eventually reaching as high as 78.58 before dropping back to the 78.50 level. The news was not all positive for the dollar though. Risk taking among investors sent the USD/CHF down more than 60 pips during mid-day trading to trade as low as 0.9335.

Today, dollar traders will want to pay attention to several potentially significant US economic indicators, including the PPI and UoM Consumer Sentiment figures. Should either of the indicators come in above their forecasted levels, the dollar may be able to extend its bullish trend against the yen. At the same time, traders will want to remember that any better than expected news could boost confidence in the global economic recovery, which may lead to dollar losses against higher yielding assets like the euro and AUD.

EUR - Comments from IMF Head Leads to Euro Gains

Following comments from the head of the International Monetary Fund (IMF) yesterday, who said that euro-zone governments should have more time to get the region's debt crisis under control, the euro was able to stage a recovery against several of its main rivals. The EUR/USD was able to advance close to 100 pips during the European session to trade as high as 1.2950, well above a recent 10-day low of 1.2824. Against the Japanese yen, the euro reached as high as 101.70 during afternoon trading, up close to 150 pips for the day.

Turning to today, analysts are warning that the euro may have trouble maintaining yesterday's gains, especially given the current state of the Spanish economy. In a sign that Spain's economy still has a long way to go before recovering, the country's credit rating was recently downgraded. Traders will want to remember that any announcements with a negative outlook for the Spanish economy could result in the euro giving up some of its recent gains.

Gold - Risk Taking Helps Gold Stage Modest Upward Recovery

The price of gold was able to advance more than $10 an ounce during European trading yesterday, as risk taking due to positive comments from the head of the IMF caused investors to shift their funds to riskier assets. The precious metal traded as high as $1774.63 during the mid-day session before staging a slight downward correction to stabilize around $1770.

Today, gold traders will want to pay attention to news out of the US, specifically the PPI and UoM Consumer Sentiment figures at 12:30 and 13:55 GMT, respectively. Any better than expected data could lead to additional risk taking among investors, which would help gold extend yesterday's upward momentum.

Crude Oil - Middle East Uncertainties Oil Prices a Boost

The price of crude oil was able to gain close to $1 a barrel yesterday, as tensions in the Middle East led to supply side fears among investors. The commodity traded as high as $92.91 a barrel before retreating back to the $92.50 level.

As markets get ready to close for the weekend today, oil traders will want to pay attention several potentially significant US indicators. Any positive American news may be taken as a sign that demand in the US will go up, which could help crude oil extend yesterday's upward trend.

Technical News

EUR/USD

While the weekly chart's Williams Percent Range has crossed over into overbought territory, most other long-term technical indicators place this pair in the neutral zone. Traders may want to take a wait and see approach for this pair, as a clearer picture is likely to present itself in the coming days.

GBP/USD

A bullish cross on the daily chart's Slow Stochastic indicates that this pair could see an upward correction in the near future. Furthermore, the same chart's Williams Percent Range has dropped into the oversold zone. Traders may want to open long positions ahead of possible bullish movement.

USD/JPY

The Bollinger Bands on the weekly chart appear to be narrowing, signaling that this pair could see a price shift in the coming days. Furthermore, the MACD/OsMA on the same chart has formed a bullish cross, indicating that the price shift could be upward. Going long may be the preferred strategy for this pair.

USD/CHF

The Williams Percent Range on the weekly chart is currently in oversold territory, indicating that an upward correction could occur in the near future. Additionally, the Slow Stochastic on the same chart has formed a bullish cross. Traders may want to open long positions for this pair.

The Wild Card

GBP/SGD

The Relative Strength Index on the daily chart is approaching the oversold zone, indicating that an upward correction could occur in the near future. Furthermore, the Slow Stochastic on the same chart appears close to forming a bullish cross. Opening long postions may be the smart choice for forex traders today.