Shutterstock photo
Markets

Crawling Towards the EU Economic Summit

Shutterstock photo

Shutterstock photo

The news stream over the past 24 hours has been EUR negative with the exception of German industrial orders from October. Yet the EUR has begun to crawl back above the 1.34 level before the strong German data.

As I was writing the latest entry for the FOREXYARD forex blog German industrial orders were released and the data simply blew away the consensus forecasts. The October numbers rose 5.2% m/m on expectations of an increase of only 0.9%. The September numbers were revised lower to -4.6% m/m from -4.3% but this did not deter EUR bids. The data underlines comments from German Economics Minister Philip Roesler whom Dow Jones quoted as saying, "Germany is the stability anchor in Europe…Germany is not concerned by short-term decisions of one ratings agency."

This morning's statement that the Bundesbank and the US will not support IMF contributions to the EFSF added to the negative sentiment from yesterday's move by S&P to put 15 euro zone nations on negative credit watch. The announcement by S&P came on the heels of press conference with Merkel and Sarkozy to implement additional oversight and penalties on those nations who violate EU budget parameters. These issues will be debated at the two day EU economic summit in Brussels which is set to begin on Thursday.

Despite the news of the past 24 hours being mostly EUR negative the EUR/USD has climbed as high as 1.3425. One reason for this may be market positioning. The most recent CFCT IMM data shows EUR non-commercials have their largest short position built in the futures market since June of last year. The one sided positioning could create a short squeeze if European leaders begin to instill a bit of investor confidence towards the end of the week. EUR/USD resistance is found at yesterday's high of 1.3490 and at Friday's high of 1.3550. Support looks to be at the November 30th low of 1.3260.

Read more forex trading news on our forex blog .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Other Topics

ForEx