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Forex: EUR/USD capped by 1.30 ahead of ECB

EUR/USD broke today in early Asia-Pacific to fresh 2013 lows, marginally below those printed by March 1st, around the 1.2963 level. It found some bids there, known previous support from the March-April 2012 period, then helped some hours after with the S&P release of Portugal sovereign credit outlook change from negative to stable, the agency said. This worked as catalyst for breaking above Monday's lows in the 1.2980 area, that was already working as resistance.

The latest corrective run higher has therefore stalled the retrace started yesterday in early London around 1.3070 highs, last at 1.2993, near session highs, and down -0.20% for the week. Not much movement in any case, given ECB meeting is just few hours away, even though some analyst are calling it a “non-event,” says head of currency strategy at Societe Generale Kit Juckes, “which will be bond-neutral and Euro negative at the margin,” he adds.

“Looking at the Euro's price action we'd say that the move toward 1.2650 might have stalled for the moment but we remain committed that it is coming,” notes GlobalFX CEO and former Head of Currency Strategy at the NAB and Westpac Gregory McKenna, adding: “While above 1.2970 it is holding but a fall through here will signal the next move lower. Our trend systems are still short,” the analyst concludes.

The fact is EUR/USD has left its mid term ascending trend line coming from July lows around the 1.2030 mark, broken down past Feb 21 and rejected the day after, and now passing around the 1.3300 level, which it would work initially as resistance in case of pullbacks. Something very possible at this moment knowing as latest COT reflects, anything below EUR/USD 1.30 is taken as an speculative approach, and vicinity of daily 200 SMA and key Fibo level 1.2850/75, which very likely would attract buyers, and/or retract sellers from adding, as the pair is already in oversold lectures hovering around the 30 line in RSI.

For the London session ahead previous to the ECB meeting there is a busy agenda until Draghi speaks, including 2 key sovereign bond auctions coming from Spain and France, French trade balance at 07:45 GMT, and German factory factory orders at 11:00 GMT, along with Swiss Foreign currency reserves at 08:00 GMT and SNB Chairman Jordan speech at 09:00 GMT, which could add volatility to Euro through EUR/CHF, last at 1.2321, pre-Italian elections levels.

Forex Flash: GBP/JPY still in uptrend - JPMorgan

Despite the falls of 147.00 in mid February, GBP/JPY "remains in a well established uptrend as long as key-Fib.-support between 139.47 and 137.61/136.84 (int. 38.2 % on 3 scales) and pivotal support at 133.49 is defended" the JP Morgan currency strategist Paul Meggyesi notes.
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