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5 Mar 2013
Forex: EUR/USD at peace with 1.30 vicinity
The EUR/USD seems to be entering a period of consolidation, an indication that for now, there is an equilibrium between buyers and sellers around the all important 1.30. Last Friday first, and yesterday (Monday) next, a sequence of failed attacks to establish the price below the big round number has resulted in a period of relative calmness.
Looking at the Italian deadlock, looks like it may be drag on for a few more days if not weeks until political parties decide what is best for the country. In theory, the longer it takes to decide a government, the more uncertainty should be surrounding the Euro, consequently prolonging its vulnerability.
Center-left leader Pier Luigi Bersani gave an ultimatum to Beppe Grillo, the leader of the 5-Star Movement, on Monday, demanding to back a temporary government, or else, a new election would be called.
Being cited on Monday by the Italian television RAI, Mr. Bersani said of Grillo: “He heads a movement that has a third of the Chamber, he needs to decide what he will do or we will all be sent packing, including Grillo.”
According to Greg McKenna, CEO at GlobalFX: "Pier Luigi Bersani's ultimatum to Beppe Grillo to get in bed with him or it was back to the polls seems a bit like a red rag to a bull - to mix up my southern European metaphors - and seems unlikely to get the result he is looking for. Indeed why would Grillo who is on the ascendancy be sacred of the ballot box. Just a sign of more instability to come and we saw that in bond yields overnight with Italian rates heading up to 3 month highs with Italian stocks off another 0.85% while the Euro was under pressure but has managed to hold firm."
While stakes continue high, the market continues to give the Euro the benefit of the doubt as no imminent evidence of selling hysteria has been noted after the bloody Italian election day. To get the EUR/USD out of 2nd gear, , a new catalyst should be found. That trigger will likely be the ECB policy meeting on March 7 and the NFP number the day after.
The only problem is that we still have over 48 hours of trading until players dissect new clues from ECB's Mr. Draghi and the 'state of affairs' in the US jobs market. This suggest that, in the meantime, EUR/USD should obey technicals more accurately, barring any potential risk headlines; the calendar remains vacant with EU retail sales the only indicator of note in Europe.
Valeria Bednarik, chief analyst at FXstreet.com, shares her technical view on the Euro: "The 1.3040/50 area comes as immediate resistance, and if above, the pair may advance towards 1.3080 before finding buyers. However, bigger time frames maintain the overall bearish trend, and the downside continues to be favored, with a break below 1.2980 opening doors for a 100 pips slide today."
Fan Yang, technical contributor, CMT, at FXstreet.com, gives a second opinion on the pair: "If EUR/USD extends above 1.3160 would suggest a consolidation or correction against the recent bearish trend. Otherwise, 1.2875 (50% retracement) would be in sight."
Looking at the Italian deadlock, looks like it may be drag on for a few more days if not weeks until political parties decide what is best for the country. In theory, the longer it takes to decide a government, the more uncertainty should be surrounding the Euro, consequently prolonging its vulnerability.
Center-left leader Pier Luigi Bersani gave an ultimatum to Beppe Grillo, the leader of the 5-Star Movement, on Monday, demanding to back a temporary government, or else, a new election would be called.
Being cited on Monday by the Italian television RAI, Mr. Bersani said of Grillo: “He heads a movement that has a third of the Chamber, he needs to decide what he will do or we will all be sent packing, including Grillo.”
According to Greg McKenna, CEO at GlobalFX: "Pier Luigi Bersani's ultimatum to Beppe Grillo to get in bed with him or it was back to the polls seems a bit like a red rag to a bull - to mix up my southern European metaphors - and seems unlikely to get the result he is looking for. Indeed why would Grillo who is on the ascendancy be sacred of the ballot box. Just a sign of more instability to come and we saw that in bond yields overnight with Italian rates heading up to 3 month highs with Italian stocks off another 0.85% while the Euro was under pressure but has managed to hold firm."
While stakes continue high, the market continues to give the Euro the benefit of the doubt as no imminent evidence of selling hysteria has been noted after the bloody Italian election day. To get the EUR/USD out of 2nd gear, , a new catalyst should be found. That trigger will likely be the ECB policy meeting on March 7 and the NFP number the day after.
The only problem is that we still have over 48 hours of trading until players dissect new clues from ECB's Mr. Draghi and the 'state of affairs' in the US jobs market. This suggest that, in the meantime, EUR/USD should obey technicals more accurately, barring any potential risk headlines; the calendar remains vacant with EU retail sales the only indicator of note in Europe.
Valeria Bednarik, chief analyst at FXstreet.com, shares her technical view on the Euro: "The 1.3040/50 area comes as immediate resistance, and if above, the pair may advance towards 1.3080 before finding buyers. However, bigger time frames maintain the overall bearish trend, and the downside continues to be favored, with a break below 1.2980 opening doors for a 100 pips slide today."
Fan Yang, technical contributor, CMT, at FXstreet.com, gives a second opinion on the pair: "If EUR/USD extends above 1.3160 would suggest a consolidation or correction against the recent bearish trend. Otherwise, 1.2875 (50% retracement) would be in sight."