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Possible Deal on Greek Debt Helps Euro
German Data Gives EUR a Boost
EUR Sees Mild Gains in Overnight Trading
EUR Tumbles Following Italian Debt Auction
Dollar Stages Downward Correction against Euro
Euro Dips Ahead of Minimum Bid Rate
Speculators Maintain Sizable EUR Short Position

Posted: 18 Jan 2012 08:20 AM PST

The euro received a positive boost during today’s session, as news that Greece may be close to a deal on its debt led to risk taking among traders. Additionally, the IMF proposal to increase its lending capacity helped riskier currencies like the euro throughout the day. That being said, the euro's gains were not so significant to signal a change in its long term bearish trend. The euro-zone's problems still far outweigh any positive news, and analysts maintain that a real reversal for the common currency is still nowhere in sight.

Turning to tomorrow, traders will want to pay attention to any announcements out of the euro-zone, especially regarding a deal on Greek debt. Positive news may be able to help the euro extend yesterday's gains. At the same time, the threat of Greece defaulting on its debt is still a very real possibility. Should such an event take place, the euro will likely tumble as a result. Traders will also want to note the results of a batch of US news scheduled to be released later in the day. Positive figures may lead to more risk taking which could boost the euro.

German Data Gives EUR a Boost

Posted: 17 Jan 2012 08:20 AM PST

A positive Chinese GDP report, combined with a better than expected German ZEW Economic Sentiment figure led to some investor risk taking throughout today’s trading. The euro received a significant boost against its safe-haven currency rivals as a result of the news. Against the US dollar, the euro rose as high as 1.2807 before retreating during the evening session. Still, the EUR/USD remains well above the 17-month low reached last week at 1.2624. The EUR/JPY, which recently hit an 11-year low, shot up well over 100 pips before hitting resistance during the afternoon session.

Analysts continue to warn that any gains the euro makes for the foreseeable future are likely to be short lived. The problems surrounding the euro-zone debt crisis are too big to ignore and are likely to grow unless significant action takes place in the near future. At the moment, investors remain concerned that Greece will have to default on its debt, while it is widely expected that the EU will cut interest rates in the near future. While positive global data is likely to boost riskier currencies like the euro in the short-term, they may not be able to help them stage a long-term recovery.

EUR Sees Mild Gains in Overnight Trading

Posted: 17 Jan 2012 01:28 AM PST

The EUR saw mild bullish movement during the overnight session, as a better than expected Chinese GDP figure boosted appeal for riskier assets. While the currency is still overwhelmingly down against its main rivals, the Chinese data provided it with a brief respite. The EUR/USD shot up over 100 pips before hitting a significant resistance line at 1.2770. Currently the pair has retreated to the 1.2748 level. The EUR/JPY has come off its recent 11-year low and is currently trading at the 97.70 level.

While analysts are quick to warn that the euro’s bullish behavior is likely temporary, traders will still want to pay attention to a batch of European news set to be released today which may impact the currency. Specifically, the German ZEW Economic Sentiment is likely to generate volatilitly. Should the indicator come in above the predicted level of -49.7, the euro may be able to extend its gains going into mid-day trading.

Later in the day, traders will want to pay attention to the Bank of Canada’s Rate Statement and the Canadian Overnight Rate. The loonie has seen significant bullish movement as of late, particularly against the US dollar. Should today’s BOC Rate Statement illustrate positive Canadian economic growth, the CAD may be able to extend its gains.

EUR Tumbles Following Italian Debt Auction

Posted: 13 Jan 2012 12:18 PM PST

The euro turned overwhelmingly bearish today, following an Italian debt auction that highlighted how fragile the euro-zone situation is. The debt auction failed to match the positive results of Thursday’s Spanish bond sale, and led to investors once again abandoning the common currency in favor of safe-havens like the Japanese yen and US dollar. The EUR/USD tumbled to just above the 1.2600 level, while the EUR/JPY approached the 11-year low reached earlier this week.

With the euro-zone still far off from any kind of solution to the current crisis, analysts are warning that the euro is unlikely to stage a meaningful correction in the near future. Next week, traders will want to pay attention to any announcements regarding the current state of the euro-zone, with any negative comments likely to bring the currency down further. Specifically, news about Greece or Italy are likely to cause the currency to slide further.

Dollar Stages Downward Correction against Euro

Posted: 12 Jan 2012 08:14 AM PST

The EUR/USD turned bullish on Thursday, as the combination of a successful Spanish bond auction and the European Central Bank’s decision not to lower euro-zone interest rates helped turn investors onto the common currency. Analysts were quick to warn that the overall trend for the pair is still strongly bearish and the gains can be partly attributed to traders correcting the huge euro sell-off in the last few weeks.

Thursday also saw the release of several important US indicators that came in below expectations. Both the Retail Sales and Core Retail Sales figures proved to be disappointing , while a higher than forecasted number of Americans filed for unemployment benefits last week. The news cast doubts on the strength of the US economic recovery. How traders will react to the poor economic data will likely depend on US indicators set to be released today.

On Friday, traders will want to pay attention to the US Trade Balance and Prelim UoM Consumer Sentiment figures. While the Trade Balance figure is forecasted to come in slightly worse than last month, the Consumer Sentiment figure is expected to increase slightly. Positive news is likely to help the USD against its main safe-haven currency rivals, especially the yen and Swiss franc, to close out the week.

Euro Dips Ahead of Minimum Bid Rate

Posted: 11 Jan 2012 08:40 AM PST

Negative comments by a top credit agency turned the euro bearish today, following several days of upward movement. The comments served as a warning to any trader who thought that the currency could maintain its bullish momentum. The EUR/USD once again dropped toward a 16-month low as investors reverted their funds back to safe-haven currencies.

Tomorrow’s batch of European news is forecasted to influence the market-place. The European Central Bank’s interest rate decision and subsequent press conference is expected to generate heavy market volatility. Additionally, euro-zone debt auctions scheduled to close out the week will illustrate just how bad the current euro-zone crisis actually is.

Traders should note that unless the debt auctions go smoothly, the euro is unlikely to stage any kind of meaningful recovery before the end of the week. With market sentiment overwhelmingly against the euro at the moment, it would take substantially good news to turn the currency bullish.

Speculators Maintain Sizable EUR Short Position

Posted: 13 Dec 2011 03:16 AM PST

The most recent CFTC IMM data shows speculators reduced their EUR bearish bets though the market’s short position remains close to levels last seen in the summer of 2010.

The EUR non-commercial short position declined to 95k which is just shy of the May 2010 high of 113k. While non-commercial shorts reduced their position by over 1.5k contracts the decline in the net short position may be explained by a resurgence of EUR bulls with the non-commercial long position rising by 6.9k contracts. To put this data in perspective the cutoff date for the report was Tuesday December 6th, just prior to the ECB meeting and EU economic summit.

It is also worth noting that CHF shorts have climbed to their largest position since June.

EURIMM