While the word "Constitution" quickly disappeared (replaced by "Treaty"), the Stability Pact of the EU went into oblivion (not replaced). Once an important birth-aid for the euro, this pact soon proved unenforceable, not even for big EC members such as as France and Germany, in the ups and downs of the economy. Why mention it then at all? Well, we wonder how long it will take for the ECB to give up the use of "Stability." That was surely the right word for the ECB and a virtue for some time. But in the present financial and economic world, such a picture is a little lopsided, to put it mildly, representing the only overall restrictive monetary policy globally. This policy represents exactly the contrary of what the ECB expects of the banking world, namely to restart lending in these dark times. That is like riding a donkey with the carrot behind it. So watch the wording closely next time the ECB speaks. Should the word "Stability" disappear, it would mean that this monetary authority is joining the real world now, and putting the euro where it should be by purchasing power parity with the USD: still lower.
But that is a longer-term aspect. In the intraday market, a bid tone for the euro is still present, which we see as a corrective reaction to the USD’s former strength. With no immediate news due from the ECB’s side (the institution’s conversationalists have remained remarkably quiet for nearly 3 weeks now), we expect that euro bid tone to prevail at least in today’s trading hours. Note the 14:30 CET U.S. Nonfarm Payrolls and the U.S. Unemployment Rate for December.
by George Clement
Intraday Market Outlook for Day Traders
EUR / USD
The short-term uptrend of the pair will continue in today’s trading, although in moderate steps. Currently trading at 1.3690, we see the market reaching and testing the resistance level around 1.3790.
GBP / USD
Cable dropped in European morning trading and is currently at 1.5190. We see not much more downside potential for today, most probably the pair will find support around the 1.5150 level. Another upmove then is in the cards, but not exceeding the 1.5270 resistance area.
USD / CHF
The USD’s short-term decline against the Swiss franc is about to run out of steam, illustrated by the much lower volatility. Currently trading at 1.0910, we do not see much more downside risk, but would not buy above 1.0870.
USD / JPY
Any gain the dollar makes against the yen is quickly erased. We are on the way back to the 90.00 level, with current prices around the 90.50 level. Expect more downside pressure, limited for today to the 89.50 support zone.
But that is a longer-term aspect. In the intraday market, a bid tone for the euro is still present, which we see as a corrective reaction to the USD’s former strength. With no immediate news due from the ECB’s side (the institution’s conversationalists have remained remarkably quiet for nearly 3 weeks now), we expect that euro bid tone to prevail at least in today’s trading hours. Note the 14:30 CET U.S. Nonfarm Payrolls and the U.S. Unemployment Rate for December.
by George Clement
Intraday Market Outlook for Day Traders
EUR / USD
The short-term uptrend of the pair will continue in today’s trading, although in moderate steps. Currently trading at 1.3690, we see the market reaching and testing the resistance level around 1.3790.
GBP / USD
Cable dropped in European morning trading and is currently at 1.5190. We see not much more downside potential for today, most probably the pair will find support around the 1.5150 level. Another upmove then is in the cards, but not exceeding the 1.5270 resistance area.
USD / CHF
The USD’s short-term decline against the Swiss franc is about to run out of steam, illustrated by the much lower volatility. Currently trading at 1.0910, we do not see much more downside risk, but would not buy above 1.0870.
USD / JPY
Any gain the dollar makes against the yen is quickly erased. We are on the way back to the 90.00 level, with current prices around the 90.50 level. Expect more downside pressure, limited for today to the 89.50 support zone.
