Euro Maintains Gains In Slow Trading Day

The euro was able to largely maintain its recent gains yesterday, as a lack of significant news resulted in a low liquidity environment in the marketplace. That being said, the Australian dollar fell to new six-week lows against both the USD and JPY following the release of disappointing Chinese and Australian economic indicators.

Today, traders will want to pay attention to the US ISM Manufacturing PMI, set to be released at 14:00 GMT. While the US Nonfarm Employment Change, set to be released on Friday, is forecasted to be the highlight of the trading week, a better than expected manufacturing figure today could help the dollar recoup some of its recent losses.

Economic News

USD - US Manufacturing Data Could Help USD
A lack of US news due to a bank holiday yesterday resulted in the US dollar seeing very little movement against its main currency rivals over the course of the day. After dropping to a three-week low against the Japanese yen on Friday, the dollar was able to see a slight upward correction during the Asian session yesterday.

The USD/JPY advanced 18 pips to trade as high as 78.39 before reversing to stabilize at the 78.30 level. The greenback also advanced close to 15 pips against the Swiss franc to reach as high as 0.9558 during European trading.

Today, the dollar is likely to see more volatility when the US ISM Manufacturing PMI is released at 14:00 GMT. Analysts are predicting that today's news will come in at 50.1, which if true, would not only signal an improvement from last month, but would also be a sign that the US manufacturing sector is expanding.

The dollar could see bullish movement during afternoon trading if the PMI comes in at or above expectations. Additionally, traders will also want to remember that the all-important US nonfarm payrolls figure is being released on Friday, and is likely to result in significant activity in the marketplace.

EUR - Euro Remains Bullish Ahead of Possible ECB Action
After hitting a two-month high against the US dollar on Friday, the euro was able to largely maintain its recent gains yesterday, despite the absence of significant economic news. The EUR/USD spent much of the day trading around the 1.2570 level, virtually unchanged from when markets opened for the week, and not far below Friday's high of 1.2636. Against the British pound, the euro took moderate losses over the course of the day, falling around 15 pips before stabilizing at the 0.7915 level.

Turning to today, euro traders will want to pay attention to US manufacturing data, as it could result in volatility for the euro. If the US data comes in below the expected level, speculations that the Fed may initiate a new round of quantitative easing in the near future may increase, which could lead to significant gains for the euro.

Later in the week, traders should not forget to pay attention to an ECB press conference, scheduled to take place on Thursday. Some analysts are predicting that the ECB could unveil steps to lower borrowing costs in the eurozone, which if true, could help the common currency extend its gains.

Gold - Gold Stays Close to 5-Month High
Hopes among investors that the Fed and ECB will both take steps in the near future to boost the economic recoveries in the US and eurozone, kept the price of gold near a five-month high during European trading yesterday. The precious metal gained more than $4 an ounce during the mid-day session to trade as high as $1692.03.

Turning to today, gold may reverse some of its upward momentum if a US manufacturing indicator comes in above its forecasted level and leads to bullish movement for the USD. In such a case, the precious metal would become more expensive for international buyers which could result in a downward correction.

Crude Oil - Despite Poor Chinese Data, Oil Maintains Gains
After taking moderate losses during Asian trading following the release of disappointing Chinese data, crude oil was able to stage a recovery during the European session. Crude fell around $0.50 to reach as low as $95.99 a barrel soon after markets opened for the week. The commodity was able to gain back virtually all of its losses and was trading at $96.46 by the afternoon session.

Today, oil traders will want to pay attention to monitoring developments in the eurozone and US. Any signs that either the ECB or Fed are getting ready to take steps to help boost their respective economies, as is widely expected, could lead to risk taking which would lead to additional gains for oil.

Technical News

EUR/USD
The Bollinger Bands on the weekly chart are beginning to narrow, signaling a possible price shift in the coming days. Furthermore, the Williams Percent Range on the same chart is approaching the overbought zone, indicating that the price shift could be downward. Opening short positions may be the wise choice for this pair.

GBP/USD
Most technical indicators on the daily and weekly charts show this pair range trading, making it difficult to make a long-term prediction. Traders may want to take a wait and see approach, as a clearer trend is likely to present itself in the near future.

USD/JPY
The daily chart's Slow Stochastic appears close to forming a bearish cross, indicating that an upward correction could occur in the near future. Furthermore, the Williams Percent Range on the weekly chart has dropped into oversold territory. Opening long positions may be the right move for this pair.

USD/CHF
Long-term technical indicators are providing mixed signals for this pair. On the one hand, the MACD/OsMA on the weekly chart has formed a bearish cross, meaning that downward movement could occur. On the other hand, the same chart's Williams Percent Range has fallen into oversold territory. Taking a wait and see approach may be the best choice for this pair.

The Wild Card

NZD/JPY
The daily chart's Relative Strength Index has dropped into oversold territory, signaling that an upward correction could occur in the near future. Furthermore, the Slow Stochastic on the same chart has formed a bullish cross. Forex traders may want to open long positions ahead of an upward breach.