FXstreet.com (Barcelona) - Markets can’t go up or down forever. A correction in EUR/USD was expected and today the euro traders have found the perfect excuse in the horrible figures out of the Spanish unemployment, which indicate that almost five million people are still struggling to find a job. Further negative surprises followed, with February investor confidence in the euro area, missing estimates at -3.9 vs. -3.6 forecasted. Although the print per se represents an improvement from January’s -7.0, the index is still deep in the negative ground.

… All eyes on the ECB

Next Thursday the ECB holds its monthly monetary policy gathering, and once again the consensus points to central bank inaction regarding the lending benchmark, currently at 0.75%. However, and in the wake of the recent 3-year LTRO repayment figures, President Draghi’s press conference has grown bigger in importance, as market participants would scrutinize Draghi’s view on the current evolution of the banking sector sanitization. Current euro strength and the shadows it casts upon the euro zone exports sector would be another issue to be dealt with, as this late form of tightening bias by the ECB marches clearly against its major peers’ easing cycles.

Since the start of 2013, the shared currency has advanced almost seven big figures if we recall January 4th lows just below the psychological 1.30 handle, and has been successively breaking key barriers since. Although psychological resistance at 1.40 is already on the horizon, it may take further efforts and sustainability above all to break it, allowing then to start thinking about late October 2011 highs in the proximity of 1.4250 and June 2011 highs just shy of 1.47. On the way down, there is not much to say regarding significant levels to breach until we reach the psychological 1.30, but it is well worth to mention Fibonacci retracement levels (November 2011 lows - February 1st highs) at 1.3465 (23.6%), followed by 1.3315 (38.2%) and 1.3193 (50%).

When comes to technicals, Karen Jones, expert at Commerzbank suggests “The move on Friday does look a little over- stretched and we would allow for some retracement towards the 6 week accelerated uptrend at 1.3459 ahead of further gains”.

In addition, the in-house Bullish Percentage Index (BPI) continues to reflect the generalized euro strength, this time showing that 78.95% of euro-based pairs are still on bullish mode, according to point and figure patterns