8 Aug 2013
EUR/USD overbought at recent high of 1.3344; 1.3414 looms just above
FXstreet.com (Barcelona) - The EUR/USD continued to grind higher as the DXY showed relative weakness despite the persistent hawkish chatter from the US FOMC representatives. Data will be the driver Thursday.
EUR/USD ignoring the Fed’s warnings that things are about to change
Despite the recent hawkish statements from Fed heads Fisher, Lacker and Evans, traders are now seemingly betting on October as being the approximate commencement date of the Fed’s tapering program. Some are saying that the market had priced in a September start. That may be partially true, but it may also be a misread on the bigger picture. If that were the reality, wouldn’t interest rates be tumbling right along with the DXY? The fact that rates remain buoyant (although just below key resistance at 2.72%) is telling us that the DXY is dropping more as a function of foreign strength rather than greenback weakness. The euro is definitely part of that perceived foreign strength.
What some may be missing is that the up move that has occurred since Bernanke’s dovish speech in early July appears to be a correction and not a new primary move higher.
Technical outlook for EUR/USD
Most technicians are definitely of the opinion that this is definitely a corrective move higher with a target range of 1.3350 to 1.3414 for EUR/USD. So, they point out that unless and until 1.3414 is conquered on a closing basis that this is a rally to be sold. The next large move they see occurring will be to the downside - with an eventual target of 1.2755. Short-term support comes in at two intraday pivots from Tuesday at 1.3265 and 1.3239
EUR/USD ignoring the Fed’s warnings that things are about to change
Despite the recent hawkish statements from Fed heads Fisher, Lacker and Evans, traders are now seemingly betting on October as being the approximate commencement date of the Fed’s tapering program. Some are saying that the market had priced in a September start. That may be partially true, but it may also be a misread on the bigger picture. If that were the reality, wouldn’t interest rates be tumbling right along with the DXY? The fact that rates remain buoyant (although just below key resistance at 2.72%) is telling us that the DXY is dropping more as a function of foreign strength rather than greenback weakness. The euro is definitely part of that perceived foreign strength.
What some may be missing is that the up move that has occurred since Bernanke’s dovish speech in early July appears to be a correction and not a new primary move higher.
Technical outlook for EUR/USD
Most technicians are definitely of the opinion that this is definitely a corrective move higher with a target range of 1.3350 to 1.3414 for EUR/USD. So, they point out that unless and until 1.3414 is conquered on a closing basis that this is a rally to be sold. The next large move they see occurring will be to the downside - with an eventual target of 1.2755. Short-term support comes in at two intraday pivots from Tuesday at 1.3265 and 1.3239