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Forex pairs in this Article » EUR/USD
FXstreet.com (San Francisco) - How far could the EURUSD go? Same people who called 1.30, 1.32, 1.33, 1.34 and 1.35 as 'big barriers' says now the same thing about the $1.36/38 area. To top it off, Goldman Sachs revised lately its forecast from 1.25 to 1.40 for the coming months and the UBS bank targeted 1.37 as 1-month goal.

While volume remains low at this time of the day, "the EURUSD bullish trend seems here to stay," points Valeria Bednarik, FXstreet.com chief analyst. In the short term however, "a downward corrective movement may be seen during current Asian session, as stocks turned south with earning reports, while the hourly chart shows indicators exhausted to the upside in overbought territory."

Currently, EURUSD is closing the day 0.55% higher at 1.3560 with the next resistance at 1.3581 (Upper Bollinger) ahead of 1.3615 (high Nov.18 2011) and then 1.3641 (high Nov.15). On the downside, a breach of 1.3500 (high Jan.29), 1.3480 price zone, past year high and then 1.3392 (MA10d).

At the beginning of the American session, US GDP reported its first decline since the Q2 2009 but the ADP private jobs report posted a +192K increase in January. "With sentiment over the disappointing US GDP release permeating markets on the session, it's no surprise the that the single currency is higher against the US dollar," comments FXstreet.com's analyst Richard Lee. "But, it's not only US economic data that is supportive of Euro strength. There's also good news to report out of Europe." Events such as the consumer sentiment surprise in the Eurozone and the declining debt costs has fueled the Euro.

Later on the day, the FOMC statement highlighted the fact that rates would be at extremely low levels as long as the jobless rate continues to be above 6.5% and the inflation figures below 2.5%. The statement also informed that MBS and Treasuries purchases would keep the previous pace at $85 billion per month. In addition, inflation expectations remain stable while the housing sector would be gathering traction.

An unstoppable Euro

The euro rallied to its highest level in 14 months versus the greenback at 1.3577 before losing some steam as investors await for the Federal Reserve decision, But the Fed was kind of non-event and EURUSD remained at similar levels around 1.3565.

With the EURUSD now higher above the 1.3550 figure, "it's plausible that the single currency will be able to advance towards near term resistance at 1.3716," points Richard Lee. "A break higher through the figure would prompt a likely test of medium term targets at 1.3890."

Christian Lawrence, analyst at Rabobank, assessed, "& while we remain of the view that central banks will continue to support risk appetite this year and EURUSD will retain an upwards bias we would also warn that there is potential for pullbacks and investors should remain on their toes".

The day Ahead

Moving forward to Thursday, the euro docket will kick in with a gauge of Retail Sales, Unemployment report and inflation reports in Germany and the Eurozone will publish its CPI number for January.

Across the Atlantic, US personal spending, jobless claims and the Chicago Purchasing Managers' Index will take the attention in the United States. Investors must pay attention to the Canadian GDP release.

- German Consumer Price Index (Jan 31 13:00 GMT)
- US Nonfarm Payrolls (Feb 01 13:30 GMT)
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