FXstreet.com (San Francisco) - The EUR/USD has begun the 4th
quarter with weekly gains, advancing around 280 pips from Monday's
low at 1.2800 to reach the highest level since September 19 at
1.3070 on Friday. The ultimate boost came from the surprising US
September report which pushed Jobless rate down to 7.8% an the
EUR/USD break above 1.3000 but market is asking how far could it
go?
The Euro advanced well this week with four of five positive days.
It was a key week for the Euro and the Dollar on the back of ECB
rate decision and Draghi's speech in Europe as well as FOMC minutes
and Employment report in the United States. As Mauricio Carrillo
from FXstreet.com commented in his recent 'To bull or not to bull'
research, "the employment report in US was overall positive on
Friday. NFP rises 114K in September vs 113K consensus; There was a
big revision in August data to 142K from 96K previously reported;
Labor force improves; Unemployment down to its lowest level since
January 2009."
While the near-term outlook remains bullish, the pair could lack
momentum to regain the 1.3100 mark just yet as indicators are
reaching overbought levels in 1- and 4-hour charts. However, should
EUR/USD break above 1.3100, the 1.3170 September double top will
the next bullish target.
TD securities team sees the the near-term bias for EUR/USD as
"likely to remain stronger." In the short term, the charts "suggest
steady accumulation of EUR on dips through late September and early
October, forcing the EUR out of the topside of the bear channel
that guided the market down from the high 1.31 zone." And that
looks "like a bull flag break-out (550-600 ticks of upside
potential implied)."
The Euro's momentum against the Dollar is bullish in several time
frames which suggests more upside windows and limited downside
risks in the near futures. "A retest of the 1.3150/75 congestion
range (at least) seems a likely consequence of technical
developments from here," adds TD. "Over the coming week, look for
better EUR support on dips and for shorts to be steadily squeezed
once again."
But UBS's analyst see EUR/USD upside potential limited by 1.32,
"Risk taking lifted the euro as usual. Some investors even
questioned how much sense QE makes after a positive surprise in the
employment sector", the UBS analyst team comments. "Also supportive
for the euro were talks about an agreement to capitalize Greek
banks".
"We still believe the upside in EURUSD is limited towards 1.32",
says UBS. "Only a big deal within the Eurozone and a rebound of GDP
should convince fundamental investors to buy the euro above 1.32".
Just as comment, recent CFTC data has suggested that speculators
are holding net short USD positions for first time in a year.