Weak Chinese manufacturing PMI print plus euro zone softer-than-expected results during August haven’t dented the euro sentiment, hovering around last Friday’s close.
K.Kirkegaard, Senior Analyst at Danske Bank, was not surprised by the outcome of the Jackson Hole Symposium and Bernanke’s neutral stance, commenting that “investors remain short EUR/USD, which should leave further upside potential in EUR/USD if the ECB delivers. We expect bond purchases to be reassumed and continue to forecast a higher EUR/USD over the coming months”.
K.Jones, expert at Commerzbank, assesses that despite the bull run last Friday, the cross did not close above the key resistance at 1.2597/1.2600, condition sine-qua-non to allow further upside. The analyst notes that the above mentioned barrier has now become even stronger, as “directly over head lies the 1.2657 downtrend and 1.2748 the June high. The risk of failure here is seen as high”. She adds “we need a break below the short term uptrend at 1.2407 to alleviate upside pressure” which coincides with the bank’s medium-term bearish outlook.