FXstreet.com (Córdoba) - The euro managed to push higher and
printed a fresh 5-week high versus the dollar on Friday, but it
lacked strength to consolidate at that level and pulled back at the
beginning of the New York session amid talk month end dollar
demand.
However, EUR/USD regained the 1.3000 mark and is headed to retest
highs as market's mood swings continue to drive crosses. An upbeat
reading on Chicago PMI helped to offset weak spending and income
data, underpinning stocks and putting the greenback under pressure.
Trading has been choppy lately as investors react to mixed
headlines out of Washington regarding progress in talks on averting
the "fiscal cliff", when spending cuts and tax increases will come
into effect in 2013. Meanwhile in Europe, Germany's parliament
approved new aid measures for Greece, including the reduction of
interest Greece pays on loans and the release of bailout funds.
So where do we stand?
Amid contradictory headlines on the US fiscal cliff, and light
stream of news from Europe, the EUR/USD has seesawed this week.
However, the pair holds a positive bias having risen within the
last 3 days. A decisive break above 1.3020 would confirm the
short-term bullish bias, paving the way for a rally toward 1.3100
and even 1.3170. On the other hand, this week lows at the 1.2880
region should contain dips in order to keep focus on the upside.
According to the TD Securities team, the EUR clearly continues to
buck all signals on the fundamental front, poking a little more
decisively above the 1.30 figure overnight despite a softer than
expected Eurozone CPI and a record high Eurozone unemployment
figure. "Positive technical signals continue to mount, so we
continue to favour upside protection against a potential stronger
surge", they comment.
On the other hand, Nick Bennenbroek, Head of Currency Strategy at
Wells Fargo Bank holds a slight bearish bias for the cross but
warns about next week FX drivers. "Investors are also watching U.S.
budget talks closely and are inclined to take an optimistic view of
those negotiations. However, the talks have not yet shown any
concrete progress, with Republican's yesterday rejecting President
Obama's initial tax-and-spending proposals as part of those talks",
says Wells Fargo analyst. "We have a very slight bias to U.S.
dollar strength and foreign currency weakness in the coming days,
though also acknowledge that U.S. budget talks, nonfarm payrolls
and the Federal Reserve's monetary policy announcement will likely
be the key FX drivers in the near-term".