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Forex: EUR/USD bouncing off lows, around 1.2955/60

After dipping to fresh 2013 lows in the proximities of 1.2920/25, the single currency has managed to pick up pace and trade back around the mid 1.29s, in an initial attempt to regain the psychological mark of 1.3000

“Accordingly, if the EURUSD trades below 1.2950, selling could accelerate into 1.2880/900 – the December swing lows – before buying interest returns to the market. Fundamental pressure is building against the EURUSD as the divergence between the Euro-zone and US economies grows, and the Advance Retail Sales print reinforces my view for the EURUSD to trade below 1.2700 in the 2Q’13."

At the moment, EUR/USD is down 0.59% at 1.2950 with the next support at 1.2923 (low Mar.13) ahead of 1.2881 (low Dec.10) and finally 1.2878 (low Dec.7)
On the upside, a breakout of 1.3075 (high Mar.12) would bring 1.3128 (MA100d) and then 1.3135 (high Mar.8).

Forex Flash: Could GBP return to risk-traded currency? – UBS

Right until the recent crisis, it appears that investors were on a structural level over-optimistic ('irrational exuberance' springs to mind). Central bank puts (pre-crisis) and imbalances could not defy gravity and everything came to head in 2008. Ever since, the market has probably learned to keep expectations to the bare minimum, and count on the economy to consistently outperform. This way, the process reinforces itself and a positive cycle develops as activity levels rise higher than expectations. According to Research Analyst Gareth Berry at UBS, “For some reason, the process is working in the opposite way in the UK. Data consistently disappoints, which leads to weaker expectations - and crucially - even weaker activity. The asymmetry suggests some element of 'loss aversion' in play: economic agents are unwilling to invest because expectations are weak, rather than take the risk to capture potentially outsized gains (via first-mover advantage).”
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EUR/USD weighed by divergent economies

Today's data did nothing but highlight the divergences between the US and the eurozone economies. While the US reported much stronger than expected retail sales, the eurozone's industrial production report disappointed and Italy's debt auction didn't reach the targeted amount of bonds.
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