FXstreet.com (San Francisco) - It could be the seasonal soap
opera, the EUR/USD has left the 1.2740 mark below and after a short
term correction from 1.2800, the pair has found support at 1.2760
and it is ready to attack the 1.2800 again. Will the euro be able
to trade bullish?
The euro advanced versus the dollar on Thursday, extending its
recovery from a 2-month low of 1.2660 scored earlier this week to
reach 1-week high at 1.2800 even though eurozone uncertainty is far
from over and poor economic data.
Today's advance in the single currency was bolstered mainly by
rumors, ignoring preliminary EMU GDP data in the third quarter,
confirming a double dip recession in the 17-nation bloc.
In the American market, investors were afraid from the fiscal cliff
but also concerned from Wal Mart forecast and the almost epic Apple
) collapse. Since September 25th, the APPL share has dropped 25.1%
from its all time high at 702.10 to the current 525.62.
The main stocks indexes in the United States have extended its
declines too, the DJIA has lost 0.23% or 28.57 pts to close at
12,542.38, lowest level since June 26. The S&P 500 eased 2.17
pts or 0.16% to finish the day at 1,353.32, lowest since July 25.
And the Nasdaq declined 0.35% or 9.87 pts to end the session at
2,836.94, minimum since June 25.
Is there a new bottom in place?
The EUR/USD rose sharply and regained the 1.2800 mark at the
beginning of the American session, with no clear catalyst for the
move and with some analysts blaming short-squeeze for the latest
rally. EUR/USD climbed as high as 1.2801 before easing slightly,
currently the pair is closing the day at the 1.2780 area, up 0.35%
on the day.
"Picture continues to be complicated for EUR/USD, as despite the
pair stands near weekly high the common currency is unable to catch
up momentum," comments FXstreet.com Chief Analyst Valeria Bednarik.
"Price stands steady above the 1.2750 mark; indicators head higher
in positive territory, with price currently testing the 1.2780/90
resistance level. Break above, will favor an upward continuation
towards the 1.2840 price zone."
On the other side, and given the current dynamic, "technical
traders are taking note of potential opportunity in the EURUSD,"
says FXstreet.com analyst Richard Lee. "Particularly, EURUSD at
1.2675 support is being eyed as a major backstop to further selling
in the single currency,lending to dollar weakness."
In the middle term, Bank of Tokyo Mitsubishi UFJ analysts believe
that the EUR/USD's outlook for next week is bearish. The BTMU
believe that the euro is likely to remain under downward pressure
in the week ahead having failed to substantially break back above
the 1.3000 level.
Karen Jones, Head of FICC Technical Analysis at Commerzbank,
remains bearish on the cross, and comments that technical studies -
break down of a symmetrical triangle - would imply a decline to the
1.2480 region. About the recent rebound she argues "this has not
dislodged any resistance of note and is viewed as merely a minor
correction. Rallies are expected to find initial resistance at
1.2800 and be contained by the 1.2890/92 short term downtrend".
Finally, investor must pay attention to tomorrow's US industrial
production and TIC data as a Richard Lee comments, "a lot of
optimistic expectations are mounting for tomorrow's output report",
but there are some considerations as to what to expect as "a
bullish figure would help to support further advances in the US
dollar against currencies like the European euro and the Japanese