ANALYSIS

US Unemployment Claims May Generate Volatility Today

The euro remained under pressure against the US dollar throughout yesterday's trading session, as investors remained cautious regarding Greece's financial situation. The EUR/USD spent much of the day range trading around the 1.3225 level after failing to break above key resistance lines the day before. Today, traders will want to pay attention to the weekly US Unemployment Claims figure. A better than expected result may result in the euro falling further against the greenback.

Summary

USD - US Unemployment Claims May Generate Volatility Today

GBP - Sterling Tumbles Following MPC Meeting Minutes

JPY - Yen Drops to 7-Month Low vs. USD

Crude Oil - Crude Comes Off Recent Highs amid Decreased Demand


Forex Market Trends – 23 February 2012

EUR/USD

GBP/USD

USD/JPY

USD/CHF

AUD/USD

EUR/GBP

Daily Trend

up

up

up

down

up

up

Weekly Trend

up

down

up

down

down

up

Resistance

1.3309

1.5875

80.39

0.9299

1.0812

0.8475

1.3242

1.5815

80.10

0.9245

1.0761

0.8461

1.3200

1.5779

79.93

0.9185

1.0729

0.8430

Support

1.3134

1.5719

79.66

0.9126

1.0678

0.8409

1.3092

1.5683

79.49

0.9072

1.0646

0.8392

1.3026

1.5622

79.23

0.9060

1.0595

0.8374

Economic News

USD - US Unemployment Claims May Generate Volatility Today

The US dollar saw gains virtually across the board yesterday, as the combination of a number of international factors resulted in investors reverting to the greenback. The USD/JPY extended its bullish trend, reaching as high as 80.37 before staging a mild downward correction. The pair's seven-month high can be attributed to last week's decision by the Bank of Japan to boost its asset buying program. The decision, combined with recent positive US fundamental indicators, has led to the value of the USD spiking.

Against the euro, the dollar continued to move up as concerns that Greece's financial troubles could still be an issue led to traders abandoning riskier assets. After peaking at 1.3263 during the morning session, the EUR/USD spent much of the day trading close to the 1.3220 level.

Turning to today, traders will want to pay attention to the US Unemployment Claims figure, set to be released at 13:30 GMT. Applications for first time unemployment insurance in the US are forecasted to have gone up slightly from last week. If true, the dollar may come under pressure against safe-haven currencies like the yen during the afternoon session. At the same time, a lower than forecasted result could help boost the greenback vs. its riskier currency rivals.

GBP - Sterling Tumbles Following MPC Meeting Minutes

The British pound tumbled against most of its main currency rivals yesterday, following the release of the latest MPC Meeting Minutes. The meeting minutes, which left the possibility of further quantitative easing in the coming months, caused investors to abandon the sterling in favor of safer assets. The GBP/USD dropped close to 160 pips following the news, but was able to stage a mild correction during the evening session. The GBP/JPY slid close to 90 pips before stabilizing around the 125.85 level.

Whether the pound is able to rebound during today's trading session will be largely dependent on fundamental indicators out of the euro-zone and US. The German Ifo Business Climate, set to be released at 9:00 GMT, is forecasted to show some improvement over last month. If true, investors may choose to place their funds with riskier assets, like the pound. Later in the day, the US Unemployment Claims figure is set to be released. Should the figure show improvements in the US employment sector, the pound may extend its losses against the greenback.

JPY - Yen Drops to 7-Month Low vs. USD

The yen fell against most of its main currency rivals during yesterday's trading session, as fresh comments from the Bank of Japan (BOJ) left open the possibility of further intervention in the currency markets. The USD/JPY hit a seven-month high at 80.37 before settling at the 80.20 level. The EUR/JPY shot up around 75 pips throughout the day before settling at around the 106.30 level.

Whether or not the yen bounces back from these losses during today's session is largely dependent on any moves by the Bank of Japan. Should the BOJ determine that the yen is overvalued and threaten to once again intervene in the currency markets, the JPY could extend its losses. On the other hand, should either the German Ifo Business Climate or the weekly US Unemployment Claims figure come in worse than forecasted, the yen may reverse some of its losses during the evening session.

Crude Oil - Crude Comes Off Recent Highs amid Decreased Demand

Crude oil saw slight downward movement during trading yesterday, as reports of decreased manufacturing in the euro-zone and China indicated a slowdown in demand. Still the commodity remained well above $105 a barrel, largely because of ongoing tensions in the Middle East. News that Iran denied UN inspectors access to a sensitive military site, signaled that the conflict with the West is far from over.

Turning to today, fluctuations in the price of crude oil will largely be determined by developments out of the Middle East. Any signs that Iran will move to limit exports may keep prices at their current highs. That being said, should any poor euro-zone news negatively impact investor risk appetite, the commodity may take some losses.

Technical News

EUR/USD

Daily chart indicators are placing this pair in overbought territory, indicating that downward movement could occur in the near future. A bearish cross has formed on the Slow Stochastic, while the Williams Percent Range is hovering close to the -20 level. Traders may want to go short in their positions.

GBP/USD

The Relative Strength Index is moving downward, but has yet to cross into the oversold region. Traders can take this as a sign that the pair has room to extend its bearish correction. This theory is supported by the Slow Stochastic on the same chart, which has recently formed a bearish cross. Traders may want to short their positions for the time being.

USD/JPY

This pair's recent upward trend looks like it still has room to grow. While the weekly chart's Relative Strength Index has gone up, it has yet to cross over into the overbought zone. Traders may want to continue going long in their positions for the time being.

USD/CHF

A bullish cross on the daily chart's Slow Stochastic indicates that upward movement could occur in the near future. The Williams Percent Range on the same chart, which is currently right around the -80 level, supports this theory. Going long may be a wise choice for traders.