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Forex: EUR/USD having a hard time at key supply 1.3140/60

FXstreet.com (Barcelona) - The Euro/US Dollar exchange rate got a bit more pricey on Thursday, with the smart money buying the currency on a steady fashion from 1.3050 level to test supply-sensitive area at 1.3040/60, where sellers remain parked.

At yesterday's report we pointed out how the easier money had been made and that now was the time when buyers and sellers would engage into the real battle to control the pair's value.

As Kathy Lien, co-founder at BKAssetManagement, notes: "The currency pair has yet to break above key levels. Throughout this week we talked about how the 1.3130 level is key. Today, the EUR/USD made its second attempt to break this level but the 50-day SMA and second standard deviation Bollinger Band continued capped the currency pair’s gains on Wednesday and continued to do so today. Even if EUR/USD clears this point, the real level it needs to break is the 100-day SMA at 1.3150."

Kathy's view is in line with Ivan Delgado, head of Asian editors at FXstreet.com: "The topside failure indicates that there is still more willing sellers than buyers overhead. Strengthening the potential bearish case is the fact that both attempts through Europe and later on along US hours failed dramatically at the 1.3135/40 level, providing clues of a potential turning point."

Karen Jones, Head of FICC Technical Analysis at Commerzbank, argued that the cross “has met its initial target of 1.3111/30. Current indications are that the market will fail here and we look for the resumption of the down move. Note this upside target zone is a pivot line and directly overhead lies the 1.3147 55 day MA”.

On the fundamental front, the European calendar has been pretty vacant in the last 24 hours, however, things should spice up again this Friday, as the Eurogroup meets today to discuss pressing issues in Portugal, Ireland and Cyprus.

According to the FXstreet.com fundamental team, "the Eurogroup head Jeroen Dijsselbloem told reporters today that Ireland and Portugal will most probably be granted a 7-year extension on the maturities of their bailout loans, during the meeting of EU finance ministers due to begin on Friday, which would help the countries return to full market financing."

“The intention is very positive,” Mr Dijsselbloem said. “I hope that we will be able to finalize that tomorrow.”

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