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Forex: EUR/USD 1.3200 eyed – DailyFX

FXstreet.com (Córdoba) - Despite pleas from policymakers that growth would return to the Euro-zone 'later in the year', there are very few signs to support that notion, according to Christopher Vecchio, Currency Analyst at DailyFX.

"More recently, we've seen unemployment rates in peripheral countries like Spain hit fresh record highs, while government estimates across the continent for deficit reduction and growth amid austerity conditions continue to erode", the analyst notes. "Today, we received another batch of soft European data that paints an even gloomier picture of the region: a deepening recession that will easily take the rest of 2013 to see some of its effects reversed".

With a European Central Bank meeting in just two days, the scales are certainly tipping towards at least a 25-bps rate cut, Vecchio comments. "In a sense, today's price action seen in the EURUSD is a mirror opposite of what occurred in July 2011. At that time, then-president Jean-Claude Trichet led the ECB to a 25-bps rate hike; yet the EURUSD fell by over 500-pips in about two weeks. This time, because a rate cut is being viewed as a positive catalyst for the region's economics, it is serving as an accelerant for the Euro", he says. "To the upside in EURUSD 1.3185/200 is eyed, swing highs that were recently rejected on April 17".

Forex: USD/JPY settles around 97.50

The dollar slumped to a fresh 2-week low against the yen, weighed by a lower-than-expected reading on Chicago PMI. However, after hitting its lowest since Apr 16 at 97.00, USD/JPY managed to bounce and settled in a range within the last hours.
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Forex Flash: ISM manufacturing index to retreat a little further to 50.5 - RBS

The Institute for Supply Management (ISM) is scheduled to publish its April US Manufacturing Index in Wednesday at 14 GMT (10h EST) and the market is expecting a decline to 50.9 in April from the March's figure of 51.3. However, the RBS analyst team sees a deeper contraction to 50.5.
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