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Forex: EUR/USD keeps above 1.3000, looking for new catalysts

Yes, the Euro is closing the session on negative note against the US Dollar, but the pair remains above the 1.3000 frontier. The EUR/USD retraced earlier gains following a risk appetite that lifted the euro to levels shy of 1.3080, but the pair was unable to keep this prices and now the EUR/USD is trading at 1.3025.

The news of the day was on the Pound field as a horrible data from the UK industrial sector prompted investors to start considering the likelihood of the British economy slipping back into recession. So, the Pound came into pressure with the GBP/USD falling to reach fresh lowest levels since June 2010 at 1.4830. Overall, the GBP was the worst performed of the day.

Heat Map

On the fundamental side, according to Newswires, European officials have said that the Troika mission is negotiating a significantly smaller bailout with the Cyprus government on the back of a higher privatization proceeds. However, the Euro was muted on the headline.

As for the short term, EUR/USD is trading at 1.3025, 0.15% down from opening price. According to the FXstreet.com trend index, the pair is strangly bullish. MACD, CCI and Momentum indicators point bullish while Stochastic and RSI are neutral in the 1-hour chart. But the picture changes dramatically in the 1-day timeframe as the MACD, CCI and Momentum are bearish with the Stochastic as the only bullish indicator.

The EUR/USD remains close to 1.3000, any movement out there?

BK analyst Boris Schlossberg commented in a recent report that "the EUR/USD rally fizzled by midday North American trade as the pair ran into resistance at key levels on the EUR/GBP cross and reports of some EU banks seeking capital provided intra-day traders with an excuse to lock in profits."

It seems that investors are awaiting for further developments in the economic panorama, specially in the euro area region. As Schlossberg points, "it appears that EU policymakers are coming to the conclusion that further austerity measures in the periphery economy may be counterproductive and if this tilt towards the "relaxation of austerity" takes hold, the EUR/USD may find a stronger bid on the assumption that the EZ economy will finally begin to recover."

In this regard, the TD Securities team comments that the EUR remains firmly within range of the past week. "We remain more neutral on the single currency at the moment, but a strong base appears to be forming above 1.2950 and the EUR could be staging a turnaround", they say. "A break above 1.3120/30 would be constructive, although an empty calendar today could leave the pair in consolidation mode for another day".

The Wednesday ahead

Moving forward to Wednesday’s docket in the euro zone, France will release its Nonfarm Payrolls figures and CPI results, ahead of Spanish inflation figures and then the EMU’s Industrial Production. Across the pond, the most relevant data would be the US Retail Sales, expected to expand 0.5% YoY in February.

- Eurozone Industrial Production

- US Retail Sales

- US Monthly Budget Statement

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