The stronger than expected US Q3 GDP data also offered some relief to market sentiment, but US stocks failed to hold gains after downbeat consumer-sentiment report. The economic calendar is clear for the rest of the day, so in the absence of European news, the EUR/USD is likely to trade within its intraday range.
Euro sees intraday volatility, remains within the same range
Euro fell to a 2-week low of 1.2881 during the European session after Spain reported a record high unemployment rate of 25% and amid lingering concerns about Greece. However, the pair managed to erase losses and was last virtually unchanged at the 1.2930 zone. The cross accumulates a 0.7% loss this week.
Despite intraday volatility, the euro keeps searching a catalyst to break it 1.2800/1.3170 range where it has traded for over a month now, but as long as Spain and Greece's situations remain uncertain, such movement seems unlikely. That said, short-term picture has turned more negative after breaking below 1.3000, and loss of 1.2836 (200-day SMA) could signal further weakness ahead. On the upside, regain of 1.3000 could provide relief.
In this regard, the Wells Fargo analyst team comments that the positive news on the US economy has been offset by the 'fiscal cliff' concerns ahead of the US Presidential elections as well as the lingering uncertainties surrounding Greece and Spain. "In this context, the scope for strong directional moves appears somewhat limited, and we see the range trading environment in the currency markets persisting over the near-term".
In the view of Jane Foley, currency strategist at Rabobank, Spain is posed to remain in center stage in the near-term, saying "while the degree of any market tension over the weeks ahead will likely be calmed by the knowledge that the ECB's OMT awaits, we see risks of pullbacks in EUR/USD potentially to the 200 day sma at EUR/USD1.2836".