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Forex: EUR/USD at highs after moment of panic

FXstreet.com (Barcelona) - A rumor that the French bank Societe Generale suffered big losses caused a moment of panic around the financial markets, with the stock plunging by 6% and the EUR/USD easing to 1.3027, also with a disappointed market after the US Philadelphia Fed manufacturing survey. Following the denial of such troubles in SocGen, the pair went for a wedge that only stopped at 1.3088 high, extending the daily range. As of writing, the market is trading at 1.3070/75, previous resistance during the European session.

In April, the manufacturing survey by Philadelphia Fed dropped from 2.0 to 1.3 instead of rising to 3.3, as expected by consensus. New orders fell from -0.5 to -1.0 and employment tumbled from -2.7 to -6.8. Following a 0.5% rise in February, the CB Leading Indicator contracted by -0.1% in March. Market consensus was suggesting an improvement of 0.1%.

Meanwhile, the G20 meeting continues and BoC Governor Carney (soon to be BoE Governor) agreed with IMF Lagarde’s comment that the US is breaking out of the group of crisis economies. He also spoke about the Cyprus bail-in, which he has reserves but is not against bail-ins in general.

“Denting the near-term base above 1.3000, turns the sentiment negative, as 4h indicators are breaking below their midlines and price holds below 20 and 55 day EMA’s that keeps the downside at increased risk”, wrote Windsor Brokers analyst Slobodan Drvenica, pointing to 1.2972/18 in case of a break below 1.3000. “Recovery attempts are seen limited for now, with 1.3100 barrier, 50% of yesterday’s fall and near 20/55 EMA’s bearish crossover, seen capping”, he added.

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