FXstreet.com (San Francisco) - The EUR/USD rose 1.5% on Thursday
and closed the day at 1-week highs fueled by the risk appetite tone
following the ECB decision to keep its policy unchanged and the
Draghi's speech saying that the Eurozone is in better condition
President Draghi offered no hints of future rate cuts. Even though
Draghi said that inflation risks were balanced and economic risks
were on the downside, comments were relatively balanced. He also
said the decision to hold interest rates steady was unanimous, and
noted the significant improvement in financial market conditions.
The euro and stocks were also bolstered by solid demand at a
Spanish debt auction and solid Chinese data. Meanwhile, the Yen is
among worst performers on Thursday and even recently the USD/JPY
jumped to its highest level since July 2010 at the 88.80 area. The
surge seems to owe most if not all the renewed bullish flair to a
Nikkei article noting that the Japanese government is also planning
an agreement with the BOJ to start targeting unemployment.
Back to the Euro, currently the pair is trading at 1.3265 after
touching the highest level since January 2nd at 1.3270, and
consolidating movements beetween 1.3250 and 1.3270. In the short
term, next resistance ccomes at 1.3300 (high Jan.2) followed by
1.3308 (high Dec.19) and then 1.3368 (high Apr.3). On the flip
side, a breakdown of 1.3170 (MA21d) would expose 1.3120 (MA200h)
and then 1.3040 (Lower Bollinger).
"Trading through 1.3175 resistance, EURUSD continues to remain
bullish through the formidable 1.3300 barrier," comments
FXstreet.com analyst Richard Lee. "However, with the psychological
figure being reinforced by the 1.3307 December 19th session high,
it is likely that Euro bulls will begin to take profits ahead of
the round figure."
In a wider picture, the ANZ Research Team thinks that the EUR/USD
could hit 1.400 along 2013. The bank points on the more optimistic
assessment, the pro-active stance from the ECB and the resolve
being shown at national levels to budgetary improvement and
restructuring, and the team expects "this momentum to continue and
to be visible in a re-weighting of risk appetite towards the euro."
During 2013, "this should be reflected in narrower intra-regional
bond spreads, firmer equity markets and a gradual appreciation in
EUR/USD above 1.4000," adds ANZ.
The day Ahead
Friday's docket will kick in with a measure of the Chinese
inflation, followed by the French Current Account and Spanish
Industrial Output, all preceding a key 10-yr bond auction in the
Italian deb markets. Across the pond, the most relevant release
will be the US Trade Balance ahead of the Monthly Budget