Forex: EUR/USD fails to regain 1.2760; EU GDPs to provide excuse to fade rallies?
Forex pairs in this Article »
EUR/USD
FXstreet.com (Barcelona) - Following the U.S. FOMC Minutes, in which a number of members agreed that more QE will be needed after Operation Twist ends in December, the EURUSD rallied to a 3-day high, yet sellers camped at 1.2780 made sure buyer's fun was short-lived, and with risk-off swings taking over markets, the pair enters a new European session having failed to regain the 1.2760 resistance level.
Batch of EU GDPs to set Euro tone
On the fundamental front, a busy London session ahead for Euro as all-across-Europe preliminary GDP figures will be coming out, and market expectancy for the data is high at the moment.
First GDP to be delivered will be France at 06:30 GMT (all times GMT), followed by Germany 30 minutes later, Spain at 08:00, at the same time the ECB publishes its monthly bulletin, then the Netherlands at 08:30, Italy at 09:00, and EU's one at 10:00, along with EU CPI and Italy current account.
Thursday's preliminary European GDP data, according to BNZ FX Strategists Mike Jones, "will be an important test on whether the single-currency can retain a foothold above 1.2700." Projections are for a 0.1% contraction.
"We'd look to fade any EURUSD rallies on a more positive number given the activity indicators for the fourth quarter (including last night's industrial production numbers) don't suggest a recovery is in the offing. Indeed, momentum in the all-important French and German economies looked to have lost noticeable steam in Q4" Mr. Jones notes.
The political front will also hold plenty of meetings, including France FinMin Moscovici and BoF Governor Noyer to speak at a conference on how to finance the economy, Managing Director of the Institute of International Finance Dallara to deliver speech at 10:00 GMT, and President of the Economic and Financial Committee Wieser to speak at the European Parliament's economic and monetary affairs committee at 10:30 GMT.
In regards to EZ sovereign debt auctions, will be time for France selling up to ¬ 9 B in both long and short term maturities, with French 10 year bond yields stable for last 3 months inside a thin range 2-2.3%, last at the bottom of this range at 2.09%.
Bears still in control of the chart
According to FXWW Founder Sean Lee, "the EUR is likely to benefit of course from the heavy short-covering in the crosses of the last 24-hours so I expect dips in EURUSD back towards 1.2660/80 to find plenty of willing buyers."
"Nevertheless, EURUSD is still in a downtrend and the overnight flight back to the USD and out of emerging currencies would imply that any rallies will find plenty of willing sellers. I'd guess that 1.2650/1.2800 should cover most eventualities for the next few sessions, but much will depend on where and when the big orders enter the market" Sean adds.
Overall, according to Valeria Bednarik, Chief Analyst at FXstreet.com: "Bears continue to dominate the pair as latest approach to 1.2780 area was taken as a good selling opportunity, but lower lows and continued pressure on the Fibo level may see sellers finally giving up: confirmation will be seen if price takes the 1.2780/90 resistance, with scope then for 1.2840/80 area."
Immediate support for EURUSD to the downside lies at Nov 08/recent session lows 1.2715, followed by Friday's lows at 1.2690, and Tuesday's/2-month lows at 1.2656. To the upside, closest resistance shows at Nov 05/06 lows at 1.2764, followed by yesterday's/Friday's highs at 1.2784/9, and Nov 06 highs at 1.2824.
Batch of EU GDPs to set Euro tone
On the fundamental front, a busy London session ahead for Euro as all-across-Europe preliminary GDP figures will be coming out, and market expectancy for the data is high at the moment.
First GDP to be delivered will be France at 06:30 GMT (all times GMT), followed by Germany 30 minutes later, Spain at 08:00, at the same time the ECB publishes its monthly bulletin, then the Netherlands at 08:30, Italy at 09:00, and EU's one at 10:00, along with EU CPI and Italy current account.
Thursday's preliminary European GDP data, according to BNZ FX Strategists Mike Jones, "will be an important test on whether the single-currency can retain a foothold above 1.2700." Projections are for a 0.1% contraction.
"We'd look to fade any EURUSD rallies on a more positive number given the activity indicators for the fourth quarter (including last night's industrial production numbers) don't suggest a recovery is in the offing. Indeed, momentum in the all-important French and German economies looked to have lost noticeable steam in Q4" Mr. Jones notes.
The political front will also hold plenty of meetings, including France FinMin Moscovici and BoF Governor Noyer to speak at a conference on how to finance the economy, Managing Director of the Institute of International Finance Dallara to deliver speech at 10:00 GMT, and President of the Economic and Financial Committee Wieser to speak at the European Parliament's economic and monetary affairs committee at 10:30 GMT.
In regards to EZ sovereign debt auctions, will be time for France selling up to ¬ 9 B in both long and short term maturities, with French 10 year bond yields stable for last 3 months inside a thin range 2-2.3%, last at the bottom of this range at 2.09%.
Bears still in control of the chart
According to FXWW Founder Sean Lee, "the EUR is likely to benefit of course from the heavy short-covering in the crosses of the last 24-hours so I expect dips in EURUSD back towards 1.2660/80 to find plenty of willing buyers."
"Nevertheless, EURUSD is still in a downtrend and the overnight flight back to the USD and out of emerging currencies would imply that any rallies will find plenty of willing sellers. I'd guess that 1.2650/1.2800 should cover most eventualities for the next few sessions, but much will depend on where and when the big orders enter the market" Sean adds.
Overall, according to Valeria Bednarik, Chief Analyst at FXstreet.com: "Bears continue to dominate the pair as latest approach to 1.2780 area was taken as a good selling opportunity, but lower lows and continued pressure on the Fibo level may see sellers finally giving up: confirmation will be seen if price takes the 1.2780/90 resistance, with scope then for 1.2840/80 area."
Immediate support for EURUSD to the downside lies at Nov 08/recent session lows 1.2715, followed by Friday's lows at 1.2690, and Tuesday's/2-month lows at 1.2656. To the upside, closest resistance shows at Nov 05/06 lows at 1.2764, followed by yesterday's/Friday's highs at 1.2784/9, and Nov 06 highs at 1.2824.
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