5 Nov 2013
EUR/USD bouncing off 1.3450
FXstreet.com (Edinburgh) -After bottoming out around 1.3450, the EUR/USD picked up pace and is now hovering over the 1.3465/70 region on Tuesday.
EUR/USD in multi-week lows
The offered tone continues to prevail amongst EUR traders ahead of the ECB monetary policy meeting on Thursday. Speculations on a dovish tone by Mario Draghi keep building up since the release of the last inflation figures in the euro area, showing consumer prices expanding at an annual pace of 0.7%, down from the previous 1.1% and markedly lower than the ECB’s target. This, plus extreme long positioning would be playing against any bull attempt in the pair – net longs hit highs last seen in May 2011. “The lack of bounce in risk reversals, and a short term rates market that still points to EUR/USD closer to 1.31/32, suggests to us there is still a lot of long positioning that was not squeezed out last week. That leaves the potential for more downside if the ECB takes a more dovish tone on Thursday”, noted analysts at TD Securities.
EUR/USD levels to watch
The pair is now losing 0.34% at 1.3474 with the initial support at 1.3442 (low Nov.4) ahead of 1.3421 (38.2% of 1.2755-1.3833) and finally 1.3399 (high Aug.28). On the flip side, a break above 1.3523 (high Nov.5) would target 1.3525 (high Nov.4) and then 1.3589 (high Nov.1).
EUR/USD in multi-week lows
The offered tone continues to prevail amongst EUR traders ahead of the ECB monetary policy meeting on Thursday. Speculations on a dovish tone by Mario Draghi keep building up since the release of the last inflation figures in the euro area, showing consumer prices expanding at an annual pace of 0.7%, down from the previous 1.1% and markedly lower than the ECB’s target. This, plus extreme long positioning would be playing against any bull attempt in the pair – net longs hit highs last seen in May 2011. “The lack of bounce in risk reversals, and a short term rates market that still points to EUR/USD closer to 1.31/32, suggests to us there is still a lot of long positioning that was not squeezed out last week. That leaves the potential for more downside if the ECB takes a more dovish tone on Thursday”, noted analysts at TD Securities.
EUR/USD levels to watch
The pair is now losing 0.34% at 1.3474 with the initial support at 1.3442 (low Nov.4) ahead of 1.3421 (38.2% of 1.2755-1.3833) and finally 1.3399 (high Aug.28). On the flip side, a break above 1.3523 (high Nov.5) would target 1.3525 (high Nov.4) and then 1.3589 (high Nov.1).