FXstreet.com (Barcelona) - The bloc currency has kept its relief
rally alive post-FOMC, although euro bulls were not able to push
through the key mark at 1.3100, mainly because most of yesterday
announcement by the Federal Reserve was already priced in. What
really caught investors by surprise was the FOMC's adoption of
numerical thresholds for both the unemployment rate and inflation,
at 6.5% and 2.5% respectively. Ok, that was the boost via the
weakness exhibited by its fellow American counterpart, the
greenback.
… Rosy skies in Euroland
However, the scenario in the euro area lacks the usual sombre news
and worrisome indicators or events. Totally the opposite… so far.
Despite the initial obstacles posted by the German policy-makers,
the EU officials have managed to put their difference aside and
they seem to be ready to ratify the late agreement regarding the
SSM (Single Supervisory Mechanism) at the EU Summit. Under the
agreement the ECB will assume the role of supervisor over mostly
big banks in the euro zone and is likely to kick off towards the
end of 2014. At the same gathering, the EU leaders look set to
approve Greece's next tranche of financial aid, after the Hellenic
Republic met its debt buy-back programme targets.
In addition, the Spanish debt market continues to exceed
expectations, surpassing its targets with a relentless decline in
its bond yields.
This actual knee jerk of the EUR/USD seems to be ripe for a logical
profit taking session, mainly if we recall that the euro has been
appreciating against the US dollar since mid November, when it used
to trade in the vicinity of 1.2670
Of note, however, is that the cross is almost matching the two
previous tops of mid September and mid October above 1.3100, and
considering that tomorrow the market participants are expecting
better preliminary prints out of the key manufacturing PMI indices,
the table appears set for further gains.
Technically speaking, the in-house Bullish Percentage Index have
just passed the 50% threshold, indicating that 52.63% of euro-based
pairs are now on bullish mode, applying the point and figure
method.