FXstreet.com (Barcelona) - By yesterday afternoon, the EUR/USD
had already shrugged off the disappointing PMI prints and poor
results out of the German IFO series, helped by rumours of a leak
in a draft of a MOU regarding Greece, speaking that the Hellenic
Republic would be granted two more years to meet its commitments
with the EU, and that the retirement age would now be 67 instead of
65 and the ratio primary surplus/GDP would be 4.5%, excluding
interest costs. Furthermore, ECB's Mario Draghi also performed well
before the Bundestag. In essence this was the panorama ahead of the
FOMC statement, although it has eventually proved to be a
non-event, as it's passed almost unnoticed among the market
Moving forward, with that out of the way, euro bulls have resumed
the previously interrupted upside, pushing the single currency to
levels above the psychological 1.3000 mark against the greenback
during the European morning on Thursday. Risk appetite has taken
the relay from the Asian session, extending its momentum after the
opening bell in London and acting as an extra support for this
correction higher. An absent relevant calendar in the euro bloc
just fuelled the trend.
Indeed, it seems that the euro would close the week orbiting around
1.3000, unless unexpected rumours or comments crop up and intervene
either way. The US GDP figures to be released tomorrow might add
some fireworks, although that wouldn't be an euro factor, per se.
… Winds of change?
As every time a new threshold is trespassed, there's the requisite
need to know whether this event would be temporary, or it would
propagate a new and stronger upward movement.
In the view of analyst Karen Jones at the German Commerzbank,
EUR/USD rallies would find resistance at 1.3030/84 followed by the
area at 1.3140/80. The expert also highlights that important
support levels lie at 1.2890/36, and "a failure here would be
viewed as psychologically negative, it should be noted that we are
viewing the pattern more negatively, it looks more like a potential
top than a continuation pattern at this stage".
Senior Currency Strategist at Rabobank, Jane Foley, believes that
Spain would be the main driver behind the price action of the cross
in the near term, and she assesses "while the degree of any market
tension over the weeks ahead will likely be calmed by the knowledge
that the ECB's OMT awaits, we see risks of pullbacks in EUR/USD
potentially to the 200 day sma at EUR/USD1.2836"
According to the Bullish Percentage Index (
), developed by the research team at FXstreet.com, the current
upside in the cross is consistent with a reading above the 50%
threshold in the index, showing that more than 50% of euro-based
pairs remains bullish. However, the bearish divergence between the
BPI and some euro pairs still threatens the euro strength.
… Light docket awaits on Friday
The last trading day of the week wouldn't carry any surprises, at
least theoretically. US GDP Annualized figures for the third
quarter would be the main focus, seconded by German import prices
and the unemployment survey in Spain in Q3.