8 Aug 2013
EUR/USD may be setting up for a top at or near 1.3414; data will drive the action.
FXstreet.com (Barcelona) - With no central bankers on the docket for the next seven trading sessions, the EUR/USD will be data dependent for directional guidance. Technicians give only a little room left for the rally.
What lies ahead for EUR/USD on the fundamental front?
Today: ECB Monthly Report; US Weekly Jobless Claims
Tuesday 8/13: German CPI; EuroZone Industrial Production; German Current Situation / Economic Sentiment; US Retail Sales
Wednesday 8/14 – German GDP; EuroZone CPI; EuroZone GDP; US Producer Price Index
Thursday 8/15 – US CPI; US Weekly Jobless Claims; US TIC Flows; US Industrial Production / Capacity Utilization; US Philadelphia Fed Manufacturing Survey
Friday 8/16 – US Building Permits & Housing Starts; US University of Michigan Consumer Sentiment
Traders want to hear from Bernanke but will have to wait
In June and early July, talk of a tapering of monthly bond purchases was making the rounds and the effects on financial markets were obvious – rates were setting new short-term highs at 2.72% on the 10-year Treasury and stocks were correcting lower. Then Fed Chairman Ben Bernanke rode in on his white horse and clearly said that there would be no tapering of bond purchases for the foreseeable future. The markets reversed hard – sending stocks sharply higher and yields lower.
Now, the same “tapering” chatter is making the rounds – being spurred on my multiple Fed Heads over the last week – and rates are back near the recent highs and stocks have been drifting lower – although the drop this time around has been far gentler than in June / July. It seems like market participants are very reticent to make any heavy bets against bonds and/or with the DXY until they hear directly from Helicopter Ben himself. Unfortunately, everyone may have to wait a while for that. The next time we will get any insights to what has been on the Fed’s minds is the 8/21 release of FOMC Meeting Minutes. Aside from that, traders will have to key off the data flow both in Europe and the US.
What lies ahead for EUR/USD on the technical front?
Most technicians are definitely of the opinion that this is definitely a corrective move higher for EUR/USD with an upside target range of 1.3350 to 1.3414 – which is just above current levels. So, they point out that unless and until 1.3414 is conquered on a closing basis that this is a rally to be sold. Any close above 1.3414 will open the door to much more upside – but that would seem to fly in the face of what the FOMC leaders have been saying recently. Short-term support comes in at two intraday pivots from Tuesday at 1.3265 and 1.3239
What lies ahead for EUR/USD on the fundamental front?
Today: ECB Monthly Report; US Weekly Jobless Claims
Tuesday 8/13: German CPI; EuroZone Industrial Production; German Current Situation / Economic Sentiment; US Retail Sales
Wednesday 8/14 – German GDP; EuroZone CPI; EuroZone GDP; US Producer Price Index
Thursday 8/15 – US CPI; US Weekly Jobless Claims; US TIC Flows; US Industrial Production / Capacity Utilization; US Philadelphia Fed Manufacturing Survey
Friday 8/16 – US Building Permits & Housing Starts; US University of Michigan Consumer Sentiment
Traders want to hear from Bernanke but will have to wait
In June and early July, talk of a tapering of monthly bond purchases was making the rounds and the effects on financial markets were obvious – rates were setting new short-term highs at 2.72% on the 10-year Treasury and stocks were correcting lower. Then Fed Chairman Ben Bernanke rode in on his white horse and clearly said that there would be no tapering of bond purchases for the foreseeable future. The markets reversed hard – sending stocks sharply higher and yields lower.
Now, the same “tapering” chatter is making the rounds – being spurred on my multiple Fed Heads over the last week – and rates are back near the recent highs and stocks have been drifting lower – although the drop this time around has been far gentler than in June / July. It seems like market participants are very reticent to make any heavy bets against bonds and/or with the DXY until they hear directly from Helicopter Ben himself. Unfortunately, everyone may have to wait a while for that. The next time we will get any insights to what has been on the Fed’s minds is the 8/21 release of FOMC Meeting Minutes. Aside from that, traders will have to key off the data flow both in Europe and the US.
What lies ahead for EUR/USD on the technical front?
Most technicians are definitely of the opinion that this is definitely a corrective move higher for EUR/USD with an upside target range of 1.3350 to 1.3414 – which is just above current levels. So, they point out that unless and until 1.3414 is conquered on a closing basis that this is a rally to be sold. Any close above 1.3414 will open the door to much more upside – but that would seem to fly in the face of what the FOMC leaders have been saying recently. Short-term support comes in at two intraday pivots from Tuesday at 1.3265 and 1.3239