The bulls need to wait; EUR/USD slapped at 1.2780

Share | (San Francisco) - The Euro has finished the Wednesday's session on the positive field against the US Dollar. The EUR/USD have risen rising 0.20% from opening price to trade at 1.2735 and despite the pair already peaked up to intra-week highs at 1.2780, following the FOMC minutes release, the pair was rejected to trade below 1.2750.

According to the FOMC release, the Committee members have favored more quantitative easing after the end of 'Operation Twist'. The statement also informed that the housing sector is posting gradual improvements and the inflation hovers over 2.0%. Members also pointed out that the US economy has grown at a moderate pace.

But the real topic in the American session was the so called "fiscal cliff" as US President Barack Obama and House Speaker John Boehner have exposed antagonistic positions again.

Obama offers an agreement to extend tax cut to the middle class, "the 98% of the US population" as the president said, but Republicans want a global agreement including those 2% who are earning more than 200k, 250k in couples, by year.

In the other side of the Atlantic, Olli Rehn, the European Commissioner for Economic and Monetary Affairs and the Euro, commented that Spain won't need any additional step as the Iberian country is on track to match 2012 and 2013 deficit targets. Rehn also stated that Spain won't ask for bailout in the short term.

And the risk went off and Wall Street reverted its initial positive trend and closed with another sell off. The Dow Jones collapsed 1.45% or 184.92 pts to close at 12,571.26 on Wednesday. The S&P 500 eases 1.39% or 19.04 pts to finish at 1,355.49. The Nasdaq Composite lost 37.08 pts or 1.29% to end the day at 2,846.81.

EUR/USD ready to resume upside? Not too fast!

EUR/USD touched a intra-week high of 1.2780 following the FOMC minutes and it was rejected to trade back to its previous range between 1.2725 and 1.2750. At least at this point, headlines aren't shocking enough to propel a decisive move in the cross.

In the short term, "price needs to detach from current area to define a clearer set up; the hourly chart shows a slightly positive tone as price holds above 20 SMA, yet indicators are losing upward potential turning south above their midlines," comments Valeria Bednarik,'s Chief Analist. "In the 4 hours chart technical readings have also turned bullish yet unless an acceleration above afore mentioned level, bears will maintain control of the pair."

In the opinion of Derek Halpenny, analyst at BTMU, "The euro is holding up well and reflects the broad stability in euro-zone debt markets. However, the risks are clear and a further widening of periphery yield spreads over Germany is likely, pressuring the euro to the downside".

As for the middle term, Geoffrey Yu, researcher at UBS, says the bank's outlook on the cross remains bearish and adds "the pair closed below its key support at 1.2741. This break opens way for a medium term decline towards 1.2474. Resistance at 1.2879 the November 7 high".

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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As of 4/23/2014, 11:34 AM