With a heavy news day ahead, many traders are awaiting more data releases later in the week before buying up further EUR, especially during this week's employment and interest rate focus. With today's high liquidity, some heavy movement is expected, though this is only the start of a volatile week; a fact alone which could hold liquidity back somewhat.
JPY - Japanese Yen Expecting Little Movement
The Japanese yen (JPY) was seen trading significantly higher versus most currencies this morning as its value as an international safe haven begins to get challenged by the prevailing economic conditions. Being linked to international risk sentiment, the yen has experienced an expected uptick during a period when shifts away higher yielding assets became prominent.
The latest moves of the JPY are causing some concerns, however, as many speculators were anticipating a downturn following the Bank of Japan's (BOJ) latest rate statement. A strengthening yen has benefits for the buying power of the island economy, though its dependence on exports makes a strong yen unfavorable for longer-term growth in Japan's current financial model. The persistence of the yen's rising strength is causing some furrowed brows in Japan's economic circles, and this may be a cause of its mixed trading behavior.
Gold - Gold Price Meeting Resistance
The price of Gold found heavy support over the past several days despite the surging strength of the US dollar, the currency in which such assets are valued. Gold has been trading with wilder price action since early August, but traders have been awaiting a price correction from the rampant increase in risk aversion due to rising tensions from the euro zone's periphery and a sudden lift off in dollar values.
As investors seek safety, the value of Gold, which has been seen trading with bullish results for the past eight trading days, is expected to rise further should it breach the current resistance level it is currently testing at $1,742. A sudden rise in dollar values due to this week's uncertain environment is expected to assist the sentiment favoring Gold, however. Should risk sentiment continue to bounce in sporadic directions this week, the price for this precious metal may continue to experience similar swings in value, favoring an upside as Gold holds within its current bullish channel.
An impressive run higher over the month of October took the EUR/USD as high as 1.4250, the 61% retracement from the May to October move. However, a failure of the pair to overcome this key technical mark does not bode well for the EUR in the near term. Also worth noting is the failure of the pair to move above its previously broken trend line from the June 2010 and the January 2011 lows. Falling stochastics on the daily and weekly chart also point to declines in the value EUR/USD.