Uncertainty Regarding ECB Action Sends EUR Lower

The euro saw losses across the board on Friday, as inaction on the part of the European Central Bank (ECB) to lower borrowing costs in Spain and Italy resulted in risk aversion in the marketplace. This week, in addition to any developments regarding the ongoing euro-zone debt crisis, traders will also want to pay attention to several indicators out of the US which could lead to market volatility. Tuesday's Retail Sales, Core Retail Sales and PPI figures, followed by manufacturing data on Thursday and a consumer sentiment indicator on Friday, are all forecasted to show growth in the US economy. If true, risk taking could return to the marketplace which may lead to euro gains.

Economic News

USD - US News Set to Generate Market Volatility This Week

The US dollar had a mixed trading day on Friday, as risk aversion due to the euro-zone debt crisis led to gains against the EUR, but also losses against the JPY. After spiking more than 50 pips during the evening session to trade as high as 1.2315, the EUR/USD began falling and eventually closed out the week at 1.2286. Against the yen, the dollar fell some 45 pips over the course of the European session to reach as low as 78.15. The greenback was able to stage a moderate recovery during the evening session and finished out the week at 78.28.

This week, dollar traders will want to note a number of potentially significant US indicators set to be released. Tomorrow in particular may turn out to be a hectic day in the marketplace, as the US Retail Sales, Core Retail Sales and PPI figures are all set to be released at 12:30 GMT. With all three indicators forecasted to show improvements in the US economy, risk taking could return to the marketplace and result in losses for the safe-haven greenback.

EUR - EU Debt Worries Weigh Down on Euro

Ongoing concerns among investors regarding the ECB's ability to combat the euro-zone debt crisis weighed down on the euro before markets closed for the weekend on Friday. Against the safe-haven Japanese yen, the common currency fell more than 90 pips during European trading to reach as low as 95.71 before bouncing back to finish out the day at 96.18. The EUR/GBP dropped more than 40 pips over the course of the day to close the week out at 0.7831.

Turning to this week, Tuesday is likely to be the most volatile for euro traders, as a batch of data is set to be released out of the euro-zone. Attention should be given to the French and German Prelim GDP figures, as well as the German ZEW Economic Sentiment. As the two wealthiest countries in the EU, French and German indicators tend to have a significant impact on the common currency. Furthermore, the euro could see considerable movement in the coming days if there are any announcements regarding new plans to combat the debt crisis in the region.

Gold - Gold Turns Bullish to Finish Week

After taking losses for most of the first part of the day on Friday, gold was able to rally for significant gains during the afternoon session. The precious metal dropped more than $12 an ounce during morning trading to reach as low as $1605.21, after a worse than expected Chinese trade figure led to risk aversion in the marketplace. That being said, an afternoon rally saw gold advance by more than $15 to finish out the week at $1619.60.

This week, gold traders will want to pay attention to a batch of potentially significant US news set to be released throughout the week. Any better than expected US news could result in risk taking among investors, which could help gold extend last week's gains.

Crude Oil - Crude Recovers Following Disappointing Chinese Data

The price of crude oil tumbled during Asian trading on Friday, following the release of a worse than expected Chinese trade figure which led to risk aversion in the marketplace. Oil dropped close to $2 a barrel to reach as low as $91.68. That being said, the commodity did stage an upward correction during evening trading and eventually finished out the week $93.29.

This week, oil traders will want to pay attention to any news out of the euro-zone and its impact on risk appetite in the marketplace. In addition, any developments in the ongoing conflict between Iran and the West have the potential to create volatility in the price of oil.

Technical News

EUR/USD

A bullish cross appears to be forming on the weekly chart's MACD/OsMA, indicating that upward movement could occur in the coming days. That being said, most other technical indicators show this pair range trading, making a definitive trend hard to predict. Taking a wait and see approach may be the best choice at this time.

GBP/USD

Most long term technical indicators place this pair in neutral territory, meaning that a definitive trend is hard to predict at this time. Taking a wait and see approach may be the best option, as a clearer picture is likely to present itself in the near future.

USD/JPY

The Bollinger Bands on the weekly chart are narrowing, signaling that a price shift could occur in the coming days. Additionally, the Williams Percent Range on the weekly chart is currently about to drop into oversold territory, indicating that the shift could be bullish. Going long may be the right approach for this pair.

USD/CHF

Both the Williams Percent Range and the Relative Strength Index on the weekly chart are very close to crossing into overbought territory, signaling that downward movement could occur in the coming days. Traders will want to closely watch these two indicators. If they do signal that the pair is overbought, it may be a good time to open short positions.

The Wild Card

EUR/CAD

The daily chart's MACD/OsMA has formed a bullish cross, signaling that an upward correction could occur in the near future. Furthermore, the Williams Percent Range on the same chart has crossed into oversold territory. Forex traders may want to open long positions ahead of a bullish correction.