FXstreet.com (Barcelona) - In
detriment of much
entertaining moves that may
anticipate forthcoming
excitement in EUR/USD, other
than its typical 1.2800/15 - 1.3170/40 range action, buyers
will be facing a new European
trade taking a slightly
positive lead out of the North
American session, as trade
develops some 50+ pips above the 1.30 psychological figure.
On Monday, EU second-tier
headlines, late rally in US
equities, anticipation on
Greece's next aid
disbursement, and still some lingering optimism on the
back of Spanish PM 'Partido
Popular' win in Galicia - a
boost for austerity drive -, all
served as an excuse to pare
EUR Friday's 40+ pips losses. Capping the upside were
mostly disappointing earnings
from US corporates, including
the miss from Caterpillar,
warning on forward looking
guidance. Price catalyst in sight? The little price amusements in
EUR/USD is mainly created by
absence of major news flow,
a pattern poised to continue
for now. Despite media
outlets are dutifully calling for key events this week,
including the FOMC, German
IFO, China 'flash' PMI, US GDP, it
seems that barring a 'shocker',
big players will yet again be
short of reasons to shake much the price, as they await
fresh new catalysts. Next
week's US payrolls, Spain
bailout talks, further clarity
on US election/QE3 connections
are all candidates to inject much-needed volatility, and
hopefully more technical
resolution moves. Key market levels to trade
off Momentarily, the EUR/USD has
held in a relatively tight
range, with both selling/
buying powers failing to
achieve their jobs, as neither
1.30 got close to be tested, with weak Asia/European
trade shorts covering, nor a
stab aimed at key 1.3080 saw
any follow-through, with
chatter of some large option
expiry protected. IFR Markets has been reporting stops
through 1.2980 building for
today, thus any topside
exhaustion may see sellers
take serious notice of it.
While technical readings are mostly neutral, it is worth
noting the intra-day levels
picked by market participants
to trade of. As Valeria
Bednarik, Chief Analyst at
FXstreet.com, notes: "Selling interest is still notable at
1.3070, while bounce from the
38.2% retracement of 1.2824 -
1.3138 rally keeps buyers
fighting back." Valeria
suggests that unless a break above 1.3080 or below 1.3010
occurs, noise and choppiness
will be predominant.
According to John Normand
and Niall O'Connor, FX
Strategists at JPMorgan, the corrective manner of the
market "is still consistent with
the view that this rally from
the July low is incomplete."
Overall, the team still believes
that "a break above the September peak would shift
the focus back to the 1.3284
May high, if not a closer test
of the critical 1.3388/1.3487
March/February highs, where
the team is developing a sense that these levels "should be a
short term ceiling."
FX Times Chief Analyst Fan
Yang notes a slight bullish
technical bias early this week,
saying "the pair is starting with a flag pattern breakout,
developed since last week's
high at 1.3139. A break above
1.3080 reflects bullish
continuation attempt in the
short-term, with focus on the 1.3139-1.3150 area, very
important declining trendline."
Failure to sustain above 1.30,
and the market "will be
focused on a rising trendline
that goes to the July and 2012 low at 1.2042" adds Mr. Yang. 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.
