… Same old, same old
Now, who’s to blame for this sudden and steep up-move? Well, the Nobel Peace Price won by the EU propped up part of the upside. Rumors about Spain have done the rest, of course. Spanish government official was hitting the wires earlier, affirming that there won’t be any resistance in the euro zone to a request for financial aid by the country. Market optimism, still buoyant after yesterday US data, just bought the rumor, sending EUR/USD to the tops just above 1.2985
But all in all, the fact the ECB itself has drawn the line in the sand is far from encouraging bull-bears at all, as Currency Analyst at BTMU Lee Hardman says “It is an indication that the ECB’s pledge to purchase unlimited short-term euro sovereign debt is helping to provide reassurance to investors that a safety net is in place”.
… That’s 1.3000, again
Older doubts seem to arise again: are we, market participants, witnesses of a change in the main trend of EUR/USD?, or will this upward movement be short-lived, as many attempts before? The upcoming sessions and events will definitely shed more light on the subject, but at the moment we can sip some analysts’ views.
For example, the Swiss bank UBS has changed its very near term stance on the cross to bullish from neutral, as analyst Gareth Berry comments, adding that “initial resistance is at 1.2978, a break above which would see momentum higher and trigger a move to 1.3072 ahead of 1.3172”. In the same line of thinking, expert Karen Jones at the German lender Commerzbank, argues that the region at 1.3072 could well contain upside intents, then allowing potential pullbacks to test 1.2776, 3-month uptrend. She continues assessing “while above 1.2776 we remain unable to rule out a re-challenge of 1.3072 and possibly the 1.3173/77 band, we continue to favour failure here”. Independent analyst at Fxstreet.com, Valeria Bednarik, suggests that a breakout of 1.2990 would aim to 1.3030 en route to 1.3172
… IMF and China for starters
The Annual Meeting of the IMF in Tokyo will be the big event over the weekend, ahead of an empty docket for the euro zone on Monday. China will again lead the way in the data front, as trade balance figures on Sunday and CPI prints on Monday will put risk trends to the test. Japanese industrial production will follow, ahead of US retail sales and the NY Empire State manufacturing index.