FXstreet.com (Barcelona) - The Euro continues its struggle to get out of second gear, with the low conviction to participate on yesterday's false break of 1.35 against the US Dollar perhaps the first symptom that speculators are starting to get sidelined ahead of potential sensitive headlines coming out of the G20 meeting the next two days.
AsFan Yang, contributor at FXstreet.com, and chief analyst at FXTimes, notes, "the market is likely squaring up and staying put ahead of the G20 risk event on Friday."
Much of the G20 market attention has turned toward the Yen, yet as Greg McKenna, Global FX CEO, says, referring to an article from James MackIntosh at the Financial Times, "the real currency war that matters is the one that is getting the least amount of attention and which we mentioned yesterday which is the value of the Chinese Renmimbi and the petrodollar block."
The present intraday volatility in EURUSD can be classified as painfully erratic, with yesterday's break of 1.35 failing to garner enough follow through, before a a sharp retracement back below 1.3450 levels.
While it is mandatory that one gets prepared for potential price destabilizing headlines, the EURUSD in particular should not be directly affected, despite one of the self-fulfilling prophecies to help explain inconsistency in the Euro could refer to growing reservation in case more European official continues to make references to the 'overvalued' level of the Euro, a 'hot topic', although one that ECB President Mario Draghi has qualified as way overdone.
The current market conditions, therefore, leaves us a mundane picture to potentially increase price activity in EURUSD, other than through some headlines-fueled spikes or perhaps some key technical breaks.
EURUSD, as FXWW Founder Sean Lee explains, "is being purely used as an instrument for cross trading, rallying in early Europe as stops were triggered in EURCHF and as EURGBP buyers emerged, then retracing when activity in the crosses died down."
Looking at the technical side, according to Valeria Bednarik, chief analyst at FXstreet.com: "The daily chart shows a long upper shadow in Wednesday candle which point for further slides" she says, although all within a context, which Valeria refers as " still far from bearish..."
Valeria adds: "The hourly chart shows price trading in between Fibonacci levels, finding buyers in the 1.3430 area, 23.6% retracement of its latest daily fall, while indicators hold in neutral territory. The support to watch is the 1.3350 recent lows, ahead of the daily ascendant trend line today around 1.3270. Only below this last bears may gain control, still quite far away."