Forex: EUR/USD, more bulls engage in pursue of 1.3170
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EUR/USD
FXstreet.com (Barcelona) - Since yesterday, when it was highlighted the little to none evidence of an end in sight to Euro bulls' stampede, the technically-based prediction has come true, as the EURUSD continues rising like a champ by flirting with levels not seen since the October 18 top.
The large-scale US Dollar under-performance comes as Republicans and Democrats continue strategical political strategies to exhaust their opponents, as the clock continues to tick against both parties. As Valeria Bednarik, chief analyst at FXstreet.com, notes, "while Obama sends positive messages that in the end are vacuum, on the ongoing discussions about fiscal cliff, White House Chief of Staff William Daley said republican two-stage plan to raise the federal debt ceiling won't pass Congress, leading to a dollar depreciation against all its rivals this Tuesday."
While financial markets continue to trade as if a benign deal will be struck to prevent any major headwinds in the US economy, the U.S. labor report due to be published on Friday will start occupying trader's minds, with today's ADP and ISM Non-manufacturing readings as the starter to provide some clues.
According to Kathy Lien, co-founder at BKAsset Management, "everyone realizes that the data will be distorted by Hurricane Sandy effects and Fiscal Cliff concerns but a sharp upward or downward surprise could still set expectations for next week's monetary policy announcements." The fundamental analyst reminds us that "a number of Fed officials believe that additional asset purchases were necessary after Operation Twist ends this year" while also noting that there has been recent comments from policymakers, "suggesting that we could get more support for tying interest rates to a piece of economic data like the unemployment rate."
FXstreet.com contributor Richard Lee also gives his take on the possible implication for the ballooning EURUSD on the ADP report: "A lower than expected ADP figure could be reflective of overall weakness in the labor market - which would exacerbate already heightened nervousness surrounding the impending Fiscal Cliff debate. It would also depress expectations for Friday's non-farm payroll report, which is already anticipated to show a mild addition of 91,000. Expect EURUSD technical resistance at 1.3150 to be tested to the upside should that happen." Mr. Lee adds that downbeat US ISM Non-manufacturing PMI or US factory orders may too contribute to strengthen the pairing.
Karen Jones, Head of FICC Technical Analysis at Commerzbank, noted through the last European session that the Euro was likely to keep its upside trajectory for the time being, saying "EURUSD has maintained upside pressure, trading through the 2011-2012 downtrend, which suggests some unfinished business on the topside and further probes into the 1.3150/80 zone must be allowed for." The analyst is confident that a break above 1.3180 would negate the current bank's forecast on EURUSD short term, with an upgrade of targets towards 1.3487/1.3519.
Meanwhile, Valeria Bednarik suspects the short term bias still remains bullish as seen in the hourly chart, "with price still inside an ascendant channel and technical readings in positive territory" she notes. Ms. Bednarik stresses the need to break through 1.3138 past October monthly high to achieve 1.3170/80 area, "immediate target for current upward momentum" she concludes.
The large-scale US Dollar under-performance comes as Republicans and Democrats continue strategical political strategies to exhaust their opponents, as the clock continues to tick against both parties. As Valeria Bednarik, chief analyst at FXstreet.com, notes, "while Obama sends positive messages that in the end are vacuum, on the ongoing discussions about fiscal cliff, White House Chief of Staff William Daley said republican two-stage plan to raise the federal debt ceiling won't pass Congress, leading to a dollar depreciation against all its rivals this Tuesday."
While financial markets continue to trade as if a benign deal will be struck to prevent any major headwinds in the US economy, the U.S. labor report due to be published on Friday will start occupying trader's minds, with today's ADP and ISM Non-manufacturing readings as the starter to provide some clues.
According to Kathy Lien, co-founder at BKAsset Management, "everyone realizes that the data will be distorted by Hurricane Sandy effects and Fiscal Cliff concerns but a sharp upward or downward surprise could still set expectations for next week's monetary policy announcements." The fundamental analyst reminds us that "a number of Fed officials believe that additional asset purchases were necessary after Operation Twist ends this year" while also noting that there has been recent comments from policymakers, "suggesting that we could get more support for tying interest rates to a piece of economic data like the unemployment rate."
FXstreet.com contributor Richard Lee also gives his take on the possible implication for the ballooning EURUSD on the ADP report: "A lower than expected ADP figure could be reflective of overall weakness in the labor market - which would exacerbate already heightened nervousness surrounding the impending Fiscal Cliff debate. It would also depress expectations for Friday's non-farm payroll report, which is already anticipated to show a mild addition of 91,000. Expect EURUSD technical resistance at 1.3150 to be tested to the upside should that happen." Mr. Lee adds that downbeat US ISM Non-manufacturing PMI or US factory orders may too contribute to strengthen the pairing.
Karen Jones, Head of FICC Technical Analysis at Commerzbank, noted through the last European session that the Euro was likely to keep its upside trajectory for the time being, saying "EURUSD has maintained upside pressure, trading through the 2011-2012 downtrend, which suggests some unfinished business on the topside and further probes into the 1.3150/80 zone must be allowed for." The analyst is confident that a break above 1.3180 would negate the current bank's forecast on EURUSD short term, with an upgrade of targets towards 1.3487/1.3519.
Meanwhile, Valeria Bednarik suspects the short term bias still remains bullish as seen in the hourly chart, "with price still inside an ascendant channel and technical readings in positive territory" she notes. Ms. Bednarik stresses the need to break through 1.3138 past October monthly high to achieve 1.3170/80 area, "immediate target for current upward momentum" she concludes.
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