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Euro poised for continued range-bound trading

FXstreet.com (Barcelona) - The bloc currency keeps disconcerting investors in the most recent sessions, as today’s price action still leaves traders scratching their heads. It is worth noting that EUR/USD found sudden buying interest after weak IFO figures dragged the cross to intraday lows at sub 1.2960 levels, sparking a bull run of almost 80 pips, thereby printing highs just below 1.3040.

… A rate cut in the pipeline?

The poor fundamental data as of late have done nothing but fuel the market rumours regarding the imminence of a rate cut by the ECB in its next monetary policy meeting, due in the upcoming week. As such, the next gathering has substantially grown in importance with practically nothing in between that can prompt investors to deviate their current focus. Adding to the already heavy atmosphere surrounding the shared currency, the US Non-farm Payrolls are also due the following day of the ECB statement.

In the Italian political sphere, re-elected President Napolitano is desperately seeking consensus to put an end to the political gridlock, appointing the politician E.Letta to form a coalition government. The final chapter of this tale could be written this week, although the duration of the new coalition government escapes the most imaginative writer.

At the moment, the cross is meandering around the 1.3000/40 region and a bout of selling pressure could drag the cross to test the area of 1.2975/95, where converge the 23.6% Fibonacci retracement of the February-April decline and January lows. Further bearish impulse would then target the key 200-day moving average at 1.2935/40, en route to December lows around 1.2880/85.

On the upside, the initial hurdle would be the area of 1.3090/1.3115, where sit the channel support line and the 38.2% Fibonacci retracement of the February-April slide, ahead of 1.3201/30 (last week’s highs and the 50% Fibonacci retracement).

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The NZD/USD made an impressive jump from the 0.8400 psychological level to 0.8458 high on the RBNZ interest rate decision as the central bank announced an unchanged stance. After profit taking to 0.8413, the cross resumed an upside momentum during the Asian and European sessions to as high as 0.8474. The market is now consolidating at 0.8450.
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