Euro Receives A Boost From Manufacturing Data

The euro was able to bounce back from a three-week low against the US dollar yesterday, after positive manufacturing data out of Italy and Spain resulted in moderate risk taking among investors. The news also helped both crude oil and gold recover from some of their recent losses. Today, news out of Spain is once again forecasted to generate market volatility. While the euro saw a minor upward correction yesterday, analysts were quick to warn that until Spain formally requests a bailout, gains were likely to be temporary. Any sign today that Spain is closer to requesting an aid package may help the euro.

Economic News

USD - US Manufacturing Data Sends USD/JPY Higher

While risk taking in the marketplace led to losses for the US dollar against its higher-yielding currency rivals yesterday, a better than expected US ISM Manufacturing PMI did help the greenback against the Japanese yen. The USD/JPY shot up more than 20 pips immediately following the release of the news to trade as high as 78.09. That being said, the Australian dollar was able to benefit from euro-zone news and gained on the greenback throughout the day. The AUD/USD traded above the 1.0400 level yesterday, up close to 50 pips during the European session.

Turning to today, a lack of significant economic indicators out of the US means that any dollar movement is likely to be a result of news out of the euro-zone. Traders will want to closely monitor any announcements out of Spain and whether it is any closer to requesting an ECB bailout package. Later in the week, traders will not want to forget about the ADP Non-Farm Employment Change, ISM Non-Manufacturing PMI, FOMC Meeting Minutes and the all-important Non-Farm Payrolls figure. All of these indicators are forecasted to generate significant volatility for the greenback.

EUR - Spanish News May Continue Impacting Euro

Positive manufacturing data out of Spain and Italy yesterday was able to help the euro make gains against several of its main currency rivals. Against the US dollar, the common currency, which had hit a three-week low during overnight trading, gained some 75 pips to trade as high as 1.2937, before falling back to the 1.2900 level. The EUR/JPY advanced more than 100 pips over the course of the day before peaking at the 101.01 level.

Today, traders should be aware that while the euro might continue seeing moderate gains over the course of the day, analysts are warning that any bullish movement may be temporary. With Spain's debt crisis still very much on the minds of investors, significant bullish movement for the common-currency is unlikely to occur until a formal ECB bailout request is made and there are is at least some indication that the country is recovering. In addition, traders will want to keep an eye on Greece, as the country is still facing substantial economic difficulties that have the potential to weigh down on the euro.

Gold - Gold Bounces Back amid Risk Taking

Positive euro-zone indicators helped the price of gold bounce back to a more than six-month high yesterday. The precious metal advanced more than $20 an ounce during European trading, eventually reaching above $1791. A minor downward correction brought prices down to the $1785 level by afternoon trading.

Turning to today, gold may be able to extend its bullish run if investors determine that the euro-zone economic recovery is progressing. That being said, with big questions regarding the debt situations in both Spain and Greece, traders should be aware that the slightest bit of negative European news could cause the precious metal to stage a downward correction.

Crude Oil - Crude Oil Gains Close to $2 a Barrel

The price of crude oil spiked throughout the day yesterday, as a return to risk taking among investors helped higher-yielding assets recoup some of their recent losses. Crude traded as high as $93.30 during the European session, up just under $2 a barrel for the day.

Today, oil traders will want to continue paying attention to news out of the euro-zone, particularly anything out of Spain or Greece. Any indications that Spain is getting ready to request a bailout package could help crude oil extend yesterday's gains.

Technical News

EUR/USD

While the Williams Percent Range on the daily chart has crossed over into oversold territory, most other long-term technical indicators place this pair in neutral territory. Traders may want to take a wait and see approach, as a clearer picture is likely to present itself in the near future.

GBP/USD

A bearish cross has recently formed on the weekly chart's Slow Stochastic, indicating that a downward correction could occur in the coming days. Furthermore, the Williams Percent Range on the same chart has crossed over into overbought territory. Opening short positions may be the smart choice for this pair.

USD/JPY

In a sign that upward movement could occur in the near future, a bullish cross appears to be forming on the daily chart's MACD/OsMA. That being said, most other technical indicators on the daily and weekly charts show this pair range trading. Taking a wait and see approach may be the smart choice.

USD/CHF

A bullish cross has formed on the weekly chart's Slow Stochastic, signaling that this pair could see an upward correction in the coming days. Furthermore, the Williams Percent Range on the same chart is very close to dropping into oversold territory. Traders may want to open long positions for this pair.

The Wild Card

USD/DKK

The Bollinger Bands on the daily chart are narrowing, signaling that this pair is likely to see a shift in price in the near future. Furthermore, the Slow Stochastic on the same chart appears to be forming a bearish cross. This may be a good time for forex traders to open short positions ahead of a possible downward correction.