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Euro consolidates but keeps 1.3500 in sight
FXstreet.com (Córdoba) - The dollar is stronger on balance, as markets turned more cautious on Monday although most crosses are consolidating in ranges as stocks in Europe and the US take a breather at multi-years highs.
The euro is little changed, recovering from early losses despite soft eurozone data although momentum is lacking and EUR/USD remains well within its Friday's range, oscillating between 1.3425 and 1.3480 without a clear driver.
In the US, a much better than expected durable goods orders report was offset by disappointing home sales, leaving investors undecided and indexes mixed in Wall Street.
"While financial markets have started the week in a somewhat diffident mood, foreign currencies could recover later in the week", says Nick Bennenbroek, Head of Currency Strategy at Wells Fargo Bank. "The key events this week are from the U.S. – the Federal Reserve should continue with its quantitative easing policy, while economists expect another steady jobs report".
Euro technicals favor a bullish continuation
After reaching an 11-month high of 1.3478 on Friday, the EUR/USD entered a consolidation phase on Monday, and even though hourly chats show a neutral picture, longer term indicators remain bullish. A break above the 1.3480/85 zone (Jan 25/2012 highs) would open the doors for a continuation toward the major 1.3500 level, while only below 1.3390, the bearish pressure could increase, delaying bulls and extending the corrective/consolidative phase.
"Overall, we remain bullish near term on EUR/USD, and the EUR crosses still look like better buys to us as well", says the TD Securities team. "That suggests to us this modest consolidation is a buying opportunity. 1.3400 should provide solid support".
Meanwhile, Marc Chandler, analyst at BBH notes that the next immediate target is near 1.3500, which also corresponds with a 50% retracement of the euro's decline from its last attempt at 1.5000 back in May 2011. "The 1.3400 area should now provide support for the break out".
The euro is little changed, recovering from early losses despite soft eurozone data although momentum is lacking and EUR/USD remains well within its Friday's range, oscillating between 1.3425 and 1.3480 without a clear driver.
In the US, a much better than expected durable goods orders report was offset by disappointing home sales, leaving investors undecided and indexes mixed in Wall Street.
"While financial markets have started the week in a somewhat diffident mood, foreign currencies could recover later in the week", says Nick Bennenbroek, Head of Currency Strategy at Wells Fargo Bank. "The key events this week are from the U.S. – the Federal Reserve should continue with its quantitative easing policy, while economists expect another steady jobs report".
Euro technicals favor a bullish continuation
After reaching an 11-month high of 1.3478 on Friday, the EUR/USD entered a consolidation phase on Monday, and even though hourly chats show a neutral picture, longer term indicators remain bullish. A break above the 1.3480/85 zone (Jan 25/2012 highs) would open the doors for a continuation toward the major 1.3500 level, while only below 1.3390, the bearish pressure could increase, delaying bulls and extending the corrective/consolidative phase.
"Overall, we remain bullish near term on EUR/USD, and the EUR crosses still look like better buys to us as well", says the TD Securities team. "That suggests to us this modest consolidation is a buying opportunity. 1.3400 should provide solid support".
Meanwhile, Marc Chandler, analyst at BBH notes that the next immediate target is near 1.3500, which also corresponds with a 50% retracement of the euro's decline from its last attempt at 1.5000 back in May 2011. "The 1.3400 area should now provide support for the break out".
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FXStreet Team
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