Europhoria posed to challenge 1.33

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FXstreet.com (Barcelona) - The shared currency has received another blessing from its rival the greenback, after the US Senate and the House of Representatives have passed the bill that would avert the so-called 'fiscal-cliff', albeit temporarily until the debt ceiling discussions kick in again in six to eight weeks, opening a new front of uncertainty that could be supportive of the US dollar.

… No signs of improvement in Euroland

In the meantime, the key manufacturing PMI prints in the euro zone members and the bloc composite did not show any sign of improvement. Actually, totally the opposite is true with numbers coming in either below expectations or previous readings. However, the actual recession in the euro area and its gloomy prospects ahead of the new year seem of little importance when compared with today's big news regarding the US 'fiscal cliff'. Meanwhile, markets keep following the risk trends… blindfolded.
A correction lower in EUR/USD should not be ruled out in the near term however, as the pair has reached 'very' overbought readings, although the mood dominating the markets might allow some extension of the actual celebratory rally.

Technically speaking, expert Karen Jones at Commerzbank expects the cross to consolidate between 1.3061 and 1.3155/40, gathering strength for another attempt to higher levels. "Beyond this consolidation, scope remains to challenge the 1.3487/1.3528 resistance area. This is where the February high… and the 200 week moving average all come in and as such should offer strong resistance and provoke failure", assessed the analyst.

The in-house Bullish Percentage Index ( BPI ) is also reflecting the last trends in the risk appetite, although in a declining scope since the last week of December. The index shows that 52.63% of euro-based pairs are still in bullish mode, according to point and figure patterns.

… What Thursday brings to the table

Euro docket on Thursday is far from exciting, although the unemployment rate in the first economy of the bloc would catch the investors' attention, ahead of the ADP Employment Change in the US and the FOMC minutes.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Forex and Currencies

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