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19 Apr 2013
Euro struggling to overcome 1.3200
FXstreet.com (Barcelona) - The inability of the single currency to follow through the key limestone at 1.3100 over the last couple of sessions sheds more evidence that the recent highs just above the 1.3200 handle represents a near/medium-term top. In a week characterized by the commodities sell-off alongside the gold historical drop, the EUR/USD meandered between 1.3000 and 1.3200 although the range has significantly narrowed since yesterday.
… More weakness looms
However, one thing remained clear for market participants: the risk trends continue to rule the price action, regardless of the fundamental background. In addition, next week’s PMI results from the manufacturing and services sectors in the euro area would probe to be key in determining the next path of the cross, albeit consensus remains biased towards soft prints. At the same time, market chat continues to circulate in regard of a rate cut by the central bank commanded by M.Draghi in its next May meeting, adding to the broader bearish frame.
The ongoing Presidential elections in Italy would be a major catalyst in the very near term, although the chance of this event to unfold in line with expectations seems remote to say the least. The fact is that once the Parliament appoints the successor of G.Napolitano, the three main protagonists should agree in some form of government, with the likeliness of fresh elections hovering over the country otherwise. Odds are not favouring one or the other outcome, but in order to quell the increasing uncertainties, the situation urges a quick solution.
Technically speaking, the cross continues to trade below the uptrend channel support set from April lows.
The initial hurdle would be the area of 1.3105/20, where sit the channel support line and the 38.2% Fibonacci retracement of the February-April slide. Further buying interest would then target the region of 1.3201/30 (this week’s highs and the 50% Fibonacci retracement).
On the downside, the psychological mark at 1.3000 should contain the initial selling wave ahead of the 200-day moving average at 1.2920/25.
… More weakness looms
However, one thing remained clear for market participants: the risk trends continue to rule the price action, regardless of the fundamental background. In addition, next week’s PMI results from the manufacturing and services sectors in the euro area would probe to be key in determining the next path of the cross, albeit consensus remains biased towards soft prints. At the same time, market chat continues to circulate in regard of a rate cut by the central bank commanded by M.Draghi in its next May meeting, adding to the broader bearish frame.
The ongoing Presidential elections in Italy would be a major catalyst in the very near term, although the chance of this event to unfold in line with expectations seems remote to say the least. The fact is that once the Parliament appoints the successor of G.Napolitano, the three main protagonists should agree in some form of government, with the likeliness of fresh elections hovering over the country otherwise. Odds are not favouring one or the other outcome, but in order to quell the increasing uncertainties, the situation urges a quick solution.
Technically speaking, the cross continues to trade below the uptrend channel support set from April lows.
The initial hurdle would be the area of 1.3105/20, where sit the channel support line and the 38.2% Fibonacci retracement of the February-April slide. Further buying interest would then target the region of 1.3201/30 (this week’s highs and the 50% Fibonacci retracement).
On the downside, the psychological mark at 1.3000 should contain the initial selling wave ahead of the 200-day moving average at 1.2920/25.