Forex Trading

The EUR rose against the U.S. dollar on Wednesday, buoyed by successful bond auctions in Portugal and Poland that made the single currency's fall the prior session look overdone. The EUR rose 0.4% against the USD after an early fall as low as 1.2660.



USD - Dollar Drops against the Majors

The U.S. dollar fell against most of its major currencies on Wednesday after the Federal Reserve's Beige Book cited a slowing economy and limited inflation pressure, though stayed lower amid better news out of Canada and the U.K. As a result, by yesterday's close, the USD fell against the EUR, pushing the oft-traded currency pair to 1.2730. The dollar experienced similar behavior against the GBP and closed at 1.5470.

The greenback also remained under selling pressure on expectations that U.S. interest rates will stay at very low levels for some time. Low interest rates make the dollar less attractive to investors than higher-yielding currencies, stocks and commodities. In addition, economic recovery does not appear to be improving at the speed many investors were hoping for, and currencies appear to be tracing the movement of stocks as a result.

Looking ahead today, the two main news events that may have a very large impact on the greenback and its main currency pairs in today's trading are the Trade Balance and Unemployment Claims around 12:30 GMT. These reports are very important and likely to impact the dollar's volatility. Traders should pay close attention to the market as there is an opportunity for traders to capitalize on the fluctuations which are likely to follow this release.

EUR - EUR Gains on Successful Debt Auctions

The EUR rose against the dollar and Swiss franc on Wednesday, buoyed by successful bond auctions in Portugal and Poland that made the single currency's fall the prior session look overdone. By yesterday's close, the EUR rose against the USD, pushing the oft-traded currency pair to 1.2730. The 16-nation currency also rose against the CHF and closed around 1.2865.

The EUR also gained support after Ireland's finance ministry said nationalized lender, Anglo Irish Bank, would be split to wind down its assets. Concerns about how Ireland dealt with the troubled bank had weighed on investors recently.

The single euro zone currency tumbled 1.5% versus the dollar on Tuesday after a news report that recent stress tests of European banks sector underestimated some lenders' holdings of potentially risky government debt.

JPY - Yen Hits 15-Year High vs. the Dollar

The yen struck a fresh 15-year high against the dollar and edged closer to a 9-year peak against the EUR on early Wednesday on a flare-up in worries over euro zone banks, prompting market players to test the will of Japanese authorities to intervene. The USD/JPY fell as far as 83.35 before correcting itself. Currently the pair is trading around the 83.95 level.

Bank of Japan Governor Masaaki Shirakawa reiterated his reluctance to return to quantitative easing although he indicated the central bank was weighing its options on how to deal with the economic impact of the yen's strength.

Investors worry over a recent rise in the JPY as it makes Japanese products less competitive abroad and hurts the value of overseas sales when translated back into the Japanese currency. With steady gains primarily against the dollar, much of the yen's bullish movement could be contributed to the repatriation of overseas earnings by Japanese companies into the local economy. This has had a positive effect on major JPY currency pairings, as the rising turmoil in the market is leading to more investment in the Japanese currency.

Crude Oil - Crude Oil Inventories to be Released Today

Oil prices rose on Wednesday for the first time in three sessions to trade around $75 a barrel, bouncing with equities and supported by a weaker dollar as concerns over the European banking system eased and investors cautiously bought riskier assets.
A weaker U.S. dollar tends to boost the price of dollar-priced commodities as it lowers the price to holders of other currencies and reduces the value of the currency oil producers receive for their product.

Today, the release of crude oil inventories is likely to help determine the market's next direction for crude oil. Moreover, a release of a string of positive economic figures from the U.S. could help its bullishness. Therefore, traders are advised now to make some profits as the price of Crude Oil is set to remain volatile in the short-medium term.

Technical News

EUR/USD

The range-trading pattern on the hourly chart continues. The daily chart's Slow Stochastic is floating in neutral territory. However, the 4-hour chart's RSI is already floating in the over-sold territory, suggesting an upward correction may be imminent. When the upwards breach occurs, going long with tight stops appears to be a preferable strategy.

GBP/USD

The pair has been range-trading for a while now, with no specific direction. The daily chart's Slow Stochastic is providing us with mixed signals. The 4-hour chart does not provide a clear direction either. Waiting for a clearer sign on the hourlies chart might be a good strategy today.

USD/JPY

The pair has recorded much bearish behavior in the past several weeks. However, the technical data indicates that this trend may reverse anytime soon. For example, the weekly chart's RSI signals that a bullish reversal is imminent. An upward trend is also supported by the daily chart's RSI. Going long with tight stops may turn out to pay off today.

USD/CHF

The price of this pair appears to be floating in the over-sold territory on the daily chart's RSI, indicating an upward correction may be imminent. The upward direction on the weekly chart's Momentum oscillator also supports this notion. Going long might be a wise choice.

Gold

Gold prices rose significantly yesterday and peaked at $1,261 an ounce. However, the daily chart's RSI is floating in the over-bought territory suggesting that the recent upward trend is losing steam and a bearish correction may be impending. This might be a good opportunity for forex traders to enter a modest correction at a very early stage.

Article Source - EUR Gains on Successful Portugal and Poland Debt Auctions