FXstreet.com (San Francisco) - The Euro is currently trading at
its highest levels since September 18 close to 1.3100 after
breaking above its 1-month range between 1.2825 and 1.3070. The
shared-currency joined the latest Moody's decision to keep Spanish
rating unchanged at Baa3. Investors have been trading with
confidence so far, as Spain appears to be closer to request a
bailout, thus supporting European currencies.
The sentiment was also supported by strong earnings reports from
big companies, including Johnson & Johnson and Goldman Sachs.
The Dow Jones added 127.55 points or 0.95% to close at 13,551.78;
the S&P 500 gained 12.79 pts or 1.03% to 1,454.92; The Nasdaq
Composite rose 36.99 pts or 1.21% to finish the day at 3,101.17.
All the questions are now about if the Euro's could sustain the
rally. And many market players are concerned about that. Kathy Lien
from BK BK Asset Management commented before the latest bullish
movement that all the EUR/USD need was "to break comfortably clear
the 1.3050," and it just happened so we can assume as Lien
followed, "it could be on its way to this year's high just below
1.35," but concerns are more in line of fundamental perspectives.
Weak confidence about any resolutions in the EU summit of this
week. No decision on the Spanish bailout, no agreement on
Greece-Troika talks and Portugal and Cyprus coming to news again.
That's all reasons for lack of confidence in EU leaders.
So, as Rabobank's analyst Jane Foley thinks, "despite the
precariousness of the political backdrop there is every chance that
EUR/USD will finish the week little changed from current levels."
Foley believes that both, Euro and Dollar, "are weakened
currencies" and it has "limited the volatility of this currency
pair." Said that, Rabobank still anticipates that "an increase in
tension in Spain could force pullbacks in EUR/USD," but they "now
expect these to be limited to the EUR/USD 1.2800 area on a 1 mth
view, with EUR/USD potentially remaining essentially range driven
into year-end."
On the other hand, Christopher Vecchio, Currency Analyst at
DailyFX, recognized that expectations are low, but he "thinks there
is significant scope for a surprise. The EUR/USD could reach its
September high of 1.3170/75 by Friday."
In the same line, Wells Fargo analysts see slight bias toward
strength in the euro. "While we don't view today's FX moves as
decisive, market participants are seemingly inclined towards
optimism rather than pessimism at this point, and remain sensitive
to European headlines."