“The dollar is on the cusp of a break out to the down side against the euro and Swiss franc,” says Marc Chandler, Global Head of Currency Strategy at Brown Brothers Harriman. “There is scope for additional modest gains in the dollar bloc, but cross rate adjustments, warn they may lag in the period ahead.”
Mr. Chandler adds: “The euro has not closed above its 50-day moving average since May Day. It comes in now near $1.2410. Given the sentiment and positioning, a convincing move above the $1.2400 area should be respected in anticipation of another 2-3 cent advance in the coming weeks.”
On the fundamental front, Republican presidential candidate, Willard ‘Mitt’ Romney, said over the weekend that more Fed stimulus would not help U.S. economy. In an interview with CNN's "State of the Union" TV broadcast aired on Sunday, Mr. Romney said, "I am sure the Fed is watching, will try to encourage the economy, but I don't think a massive new QE3 is going to help this economy."
Mr. Romney explains: "The Fed's first action, quantitative easing, was effective to a certain degree. But I believe that the QE2, the second round of easing, I don't think it had the impact that they were hoping for," he said.
EUR/USD last trades just below the 1.2400 figure, in the 1.2395 area. Should the pairing power up in the days ahead, resistance is noted in the 1.2500 handle, then at 1.2585 (100-day EMA). To the downside, support lies at 1.2340 (200 EMA, 4-hr) and 1.2295 (intraday).