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Forex: EUR/USD peaks at 1.3116, consolidating gains

The EUR/USD rally on ECB's press conference peaked at 1.3116 high. As the pair's range is far stretched today, the market is currently consolidating its gains, surrounding the 1.3100 mark, around +1.00% on the day.

FOMC Member Powell will speak at 18:15 GMT and Bank Stress Test info will be revealed at 21:30 GMT. The market will be pricing in US nonfarm payrolls data due tomorrow.

The ECB press conference showed an upbeat President Mario Draghi, confident in Eurozone's economic recovery despite the talk of a potential rate cut. Also important to euro strength was the information that banks have already repaid 40% of net liquidity injected via LTROs.

Weakening the greenback was US nonfarm productivity that didn't make a good impression, as it fell from 3.2% to -1.9%, weaker than the expected -1.6%. Unit labor costs rose from -2.3% to 4.6%, more than the 4.2% consensus. However, US initial jobless claims improved against expectations: from 347K to 344k (consensus of 355K).

The 10-year Letras narrowed its yields, from 5.202% to 4.917%, in today's €2.435B bond auction. Spain also sold €569M of 3-year debt (from 2.713% to 2.632%) and €2.026B of 5-year debt (from 4.123% to 3.572%). France sold €7B of 10-year debt at 2.1% yield, lower than the previous auction (2.3%).

German factory orders dropped -1.9% (MoM) in January, instead of rising -0.5% as expected. The annualized figure fell further, from -1.9% to -2.5%, instead of improving to 1.6% as predicted.

French imports narrowed from €43.044B to €42.597B in January and exports also eased, from €37.626B to €36.735B, leaving the trade deficit widening from €-5.4B to €-5.9B, instead of narrowing to €-4.8B as expected.

MIG Bank analysts suggested a possible short-term base formation after the successful support at 1.2967 (01/03/2013 low). In case of a break of 1.3080 (06/03/2013 high), “another resistance can be found at 1.3162 (28/02/2013 high)”, wrote analyst Bijoy Kar.

Forex Flash: 143.00 remains paramount support for Bunds – RBS

Bund levels are updated for the June contract – the price reached a good support region of 143.00 after forming a meeting lines reversal pattern. According to Technical Markets Strategist Dmytro Bondar at RBS, “It is the main support in the near time to determine the extent of correction. If it is broken, then 142.50 might be tested. In the long term, the price formed a pennant pattern with the measuring target of 145.20.”
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