Forex Daily Analysis 2012-07-05

The holiday in the US influenced the currencies market as the low liquidity blocked some the major currencies' momentum against the USD that took advantage of the situation in order to correct some of the recent declines. Most of the traders in the US extend their vacation to the weekend and will resume to the markets just next week, and this might influence the markets as well. However, the following trading days are full with important indicators that might shakeout the markets.

EUR/USD

Currencies are changing momentums almost every several hours these days, mainly because of the low volatility. Therefore, promising patterns might lead to false-breaks and cause quick losses. This means that the technical analysis could be less accurate than usual and therefore necessary adjustments have to be made. The Euro reached a new weekly low yesterday, as the descending triangle pattern was built above the support at 1.24. A break-down of this pattern will probably take the Euro down to the annual low at 1.2287. The reason for this bearish momentum could be the markets' expectations for a lower interest rate announcement today by the European central bank. However, the ECB press conference might have a positive influence on the Euro if the investors get positive signals from the central bank. Either way, the market tend to be extremely volatile during such significant announcements and trading during the moments of the declaration includes high risk.

GBP/USD

The pound fell under Monday's low and triggered many selling orders that pulled it 100 pips down. The currency got the resistance of the downtrend line and created a triangle pattern in the daily chart. This triangle is neither descending nor ascending, which means that there is a strong conflict between the buyers and the sellers. In such cases, the technical trader has to get prepared for both scenarios of break-up and break-down. According to the current momentum, it looks like the pound is going to slide to the support of the uptrend line at 1.5520, as a strong break-down of this support might pull it down to 1.54. Nevertheless, the pound might continue moving between the triangle's edges until it breaks on of them. The official bank rate is published today in Britain, 45 minutes before the European, as a positive reaction by the investors might launch the pound towards the 200 SMA at 1.5750.

OIL

The price of the crude oil reached a psychological of $80 support last week and started correcting up since then. The sanctions against Iran's oil contributed to the speculations regarding the oil's prices and the traders took advantage of that. The oil rose 10% since last week and the weekly charts shows that the oil has risen over 20% on the last couple of times that it reached this support. This means that the current bullish correction might lift it up towards $100. However, if the oil makes the bearish reversal, successful break-down this time might pull it down to the level of $70.