FXstreet.com (San Francisco) - Following a shy attempt to break
down the 1.3040 level, the EUR/USD recovered to 1.3080 in the
American session but the bullish intention wasn't strong enough
with the pair trading back in a congestion pattern centered in the
region of 1.3050/60
The EUR/USD is closing 0.15% down on the day at 1.3061. Next
support levels are located at 1.3030 (Lower Bollinger) en route to
1.3020 (low Jan.7) and then 1.2998 (low Jan.4). On the flip side,
advances beyond 1.3096 (high Jan.9) would aim to 1.3140 (high
Jan.8) and finally 1.3141 (MA10d).
Continuing through on a break below the 1.3100 psychological
figure, "EUR/USD has stalled prematurely above support via the
1.3020 figure," FXstreet.com analyst Richard Lee comments. "Any
further downside is contingent on a downside violation of the
1.3020, which would activate downside tests at the 1.2962 barrier."
Nevertheless, the UBS team affirms that a EUR/USD consolidation
should be temporary. "The EURUSD rate consolidated from recent
highs due to the release of the December Fed meeting minutes, at
which some members have challenged the planned time frame of the
current quantitative easing policy", they explain. "We think the
EURUSD consolidation should be temporary and expect the ECB to
re-assure that it will do anything to keep the euro stable. So a
near term rebound of EURUSD is quite likely".
Banks and earnings
Thursday's docket is on sight: big day for the euro, as the ECB
will hold its monthly gathering. Nonetheless, market participants
expect the volatility in EUR/USD to come from President Draghi's
rhetoric, as expectations for a rate cut are almost non-existent.
Not much excitement is expected from the first ECB and BoE monetary
policy meetings of 2013, "as the majority of economists believe
both central banks will remain on hold this month," says Katarzyna
Komorowska, FXstreet.com analyst. "Nevertheless, there are some
doubts concerning ECB's action, as Mario Draghi hinted in December
at a possibility of another rate reduction."
"With speculation heightened over a potential interest rate cut in
the near term, there is a lot of attention being placed on
tomorrow's ECB rate decision," points Lee. "And, although there is
plenty of economic data to support such a move, there is always the
chance that things could play out differently."
On the other side of the Atlantic, investors were focused on
earnings season. The US shares are trading in the positive ground
on Wednesday for the first time after two consecutive sessions
closing in red. The spark initiated by Alcoa (
), posting revenues above estimates and a better prospect for the
Curiously, Alcoa finished 0.22% down on the day, but the Dow Jones
rose 61.66 points or 0.46% to finish at 13,390.51. The S&P 500
added 3.87% pts or 0.27% to 1,461.02. The Nasdaq Composite advanced
14 points or 0.45% to 3,105.81.
Another events to pay attentions are UK monetary policy decision,
claims in United States, and housing in Canada.