8 Nov 2013
Flash: EUR/USD; Down But Not Quite Out, Yet – TD Securities
FXstreet.com (London) - A research team at TD Securities noted the ECB policy shocker yesterday that caught the market long and wrong EUR/USD.
Key Quotes:
“The sell-off was brutal but, by the close, the EUR had recovered some poise”.
“News from Europe this morning of weak French IP data and—more especially, perhaps—S&P downgrading France from AA+ to AA (stable) had little impact on the EUR, however”.
“S&P was critical of the French government’s policies which, it said, would not deliver long-term growth”.
“EUR/USD found support yesterday around the 200-week MA at 1.3321 but losses earlier in the session took the market below the 1.3440/50 support zone that had held the market following the September (taper disappointment) USD sell off”.
“This area is resistance and pivotal for the market now. We think the trend has turned against the EUR as the Fed seems intent on tapering (while keeping rates low) and the ECB eases policy. And we think the current phase of price action is highly reminiscent of the late 2012/early 2013 rally and reversal in EUR/USD which saw a rapid drop from 1.37 to 1.27 when the trend turned—and only modest, short-lived counter-trend corrections on the way”.
“Short-term EUR gains should be limited to the mid/upper 1.34s if the trend lower is to extend”.
“Look to sell rallies”.
Key Quotes:
“The sell-off was brutal but, by the close, the EUR had recovered some poise”.
“News from Europe this morning of weak French IP data and—more especially, perhaps—S&P downgrading France from AA+ to AA (stable) had little impact on the EUR, however”.
“S&P was critical of the French government’s policies which, it said, would not deliver long-term growth”.
“EUR/USD found support yesterday around the 200-week MA at 1.3321 but losses earlier in the session took the market below the 1.3440/50 support zone that had held the market following the September (taper disappointment) USD sell off”.
“This area is resistance and pivotal for the market now. We think the trend has turned against the EUR as the Fed seems intent on tapering (while keeping rates low) and the ECB eases policy. And we think the current phase of price action is highly reminiscent of the late 2012/early 2013 rally and reversal in EUR/USD which saw a rapid drop from 1.37 to 1.27 when the trend turned—and only modest, short-lived counter-trend corrections on the way”.
“Short-term EUR gains should be limited to the mid/upper 1.34s if the trend lower is to extend”.
“Look to sell rallies”.