Disappointing US data lifts the euro

FXstreet.com (Córdoba) - The shared currency broke above the 1.3300 psychological level and stretched to its highest since April 2012 on Friday against the greenback, as a wider-than-expected US trade deficit encouraged investors to continue to sell the USD.

The euro was already buoyed after the ECB President gave no hints the central bank was contemplating a rate cut any time soon.

Meanwhile, US stocks slipped weighed by the financial sector after disappointing earnings reports while European indexes were mixed.

"Altogether, the news from the past 24 to 48 hours has mostly been negative for the greenback and positive for foreign currencies", said Nick Bennenbroek, Head of Currency Strategy, Wells Fargo Bank. "While it is possibly a mild surprise that the U.S. dollar is not showing more consistent weakness, we suspect the near-term direction remains lower for the greenback against most foreign currencies".

Euro breaks above 1.3300

EUR/USD broke to the upside soared toward a fresh 9-month high of 1.3364 before easing slightly. The short-term bias remains positive for the cross, although with indicators in overbought levels, pullbacks could not be dismissed.

The pair has come a long way from this week's lows, having risen over 350 pips, and the 1.3400 level appears as the next bullish target, followed by 1.3450 and 1.3485 (2012 high).

Fan Yang, analyst at FXTimes notes that today's move breaks above a previous consolidation resistance at 1.3306. "The break is a sign of bullish continuation. If the market can hold above 1.33, it would be a very strong sign that bulls are in charge of this market", he said.

Meanwhile, the Danske Bank team comments that relative monetary policy will remain a support factor for EUR/USD as the Fed is expanding its balance sheet significantly and the ECB stays on hold. "We forecast 1.35 before summer, but doubt that we will see a strong uptrend in EUR/USD as the euro offers no carry, as short euro positions have been unwound, and as peripheral bond spread tightening has run very far already".

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