It's a bird! It's a plane! No, it's super Euro!
Forex pairs in this Article »
EUR/USD
FXstreet.com (Barcelona) - The Euro has undoubtedly made enough merits to deserve such ironic title, ending the month of January as the best performing currency, with some spectacular number against almost all its direct G10 competitors. The monthly return vs the USD stood at its highest since October 2010, while the monthly gains vs the Japanese Yen were the largest since both currencies trade against each other.
Will the consistency in the Euro rally be sustainable? On the short term, analyst seem to agree that the Euro has further room to appreciate. One view that seems to be in line with current technical readings is the near term projection published yesterday by Kit Juckes, Head of FX at Societe Generale.
With relative interest rates and peripheral bond spreads all moving sharply in the Euro's favour in January, this effect "may continue to send the EURUSD higher, to 1.40 or so" Mr. Juckes notes.
However, Mr. Juckes also points at the harsh reality awaiting the Euro in the foreseeable future, saying: "That doesn't alter a view that the Euro will weaken to USD1.20 by the end of 2013 as EU/US economic divergence increases. A strong Euro may reflect trends in the currency's fundamental drivers, but it will increase economic divergence within Europe and force a horribly painful adjustment on less competitive economies."
Focusing on Friday's potential price activity, most of the show will be stolen by the U.S. jobs data. In view ofKathy Lien, co-founder at BK Asset Management:"While it would be great to see blowout job growth, the chance is unlikely because most people realize that the recovery in the U.S. economy has been slow and gradual."
This month's jobs report, according to Kathy, "is not expected to have a major impact on the U.S. dollar" she says, not being surprised at all "if the report caused as little reaction in the FX markets as this week's FOMC meeting" Kathy adds. Non-farm payrolls are expected to rise by 165K in January, up from 155K in December.
In a more technical approach, the EURUSD should print a weekly close above 1.3600 after the employment report's euphoria settles, Valeria Bednarik, chief analyst at FXstreet.com notes, "in order to open the doors for a test of the 1.3850 area later this month" the analyst notes.
Will the consistency in the Euro rally be sustainable? On the short term, analyst seem to agree that the Euro has further room to appreciate. One view that seems to be in line with current technical readings is the near term projection published yesterday by Kit Juckes, Head of FX at Societe Generale.
With relative interest rates and peripheral bond spreads all moving sharply in the Euro's favour in January, this effect "may continue to send the EURUSD higher, to 1.40 or so" Mr. Juckes notes.
However, Mr. Juckes also points at the harsh reality awaiting the Euro in the foreseeable future, saying: "That doesn't alter a view that the Euro will weaken to USD1.20 by the end of 2013 as EU/US economic divergence increases. A strong Euro may reflect trends in the currency's fundamental drivers, but it will increase economic divergence within Europe and force a horribly painful adjustment on less competitive economies."
Focusing on Friday's potential price activity, most of the show will be stolen by the U.S. jobs data. In view ofKathy Lien, co-founder at BK Asset Management:"While it would be great to see blowout job growth, the chance is unlikely because most people realize that the recovery in the U.S. economy has been slow and gradual."
This month's jobs report, according to Kathy, "is not expected to have a major impact on the U.S. dollar" she says, not being surprised at all "if the report caused as little reaction in the FX markets as this week's FOMC meeting" Kathy adds. Non-farm payrolls are expected to rise by 165K in January, up from 155K in December.
In a more technical approach, the EURUSD should print a weekly close above 1.3600 after the employment report's euphoria settles, Valeria Bednarik, chief analyst at FXstreet.com notes, "in order to open the doors for a test of the 1.3850 area later this month" the analyst notes.
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