20 Mar 2014
EUR/USD a buy into weakness?
FXStreet (Guatemala) - EUR/USD has fallen off the cliff from 1.39 post the FOMC, lucky for the ECB. This has given rise to a potential opportunity for the bulls however, or is this a correction?
Brian Martin, Strategist at ANZ explained that by raising the median forecast for the Fed Funds target, the FOMC managed to achieve for the euro what the ECB could not. “If the ECB wants the euro weaker, it would be advisable to jawbone the currency lower into the current phase of weakness”. He went onto to note that the FX market's bias is to sell EUR/USD, as consensus forecasts indicate. “In the short run, bears are in the ascendancy as the perceived relative monetary policy shift is said to explain and justify the USD's rise. Since the start of September last year, the correlation between the 2yr EZ-US bond differential and EUR/USD has been 0.1%, indicating virtually no explanatory relationship between relative short-run monetary policy expectations and the exchange rate. This fall in the euro may therefore be a ‘knee-jerk’ reaction”.
EUR/USD Levels
The 20 DMA is 1.3809, the 50 DMA is 1.3698 and the 200 DMA is 1.3490. RSI (14) reads 34.25. Supports are ascending from 1.3720 and 1.3749. Spot is 1.3784 while resistances are 1.3805, 1.3843, 1.3880 1.3899 and 1.3930.
Brian Martin, Strategist at ANZ explained that by raising the median forecast for the Fed Funds target, the FOMC managed to achieve for the euro what the ECB could not. “If the ECB wants the euro weaker, it would be advisable to jawbone the currency lower into the current phase of weakness”. He went onto to note that the FX market's bias is to sell EUR/USD, as consensus forecasts indicate. “In the short run, bears are in the ascendancy as the perceived relative monetary policy shift is said to explain and justify the USD's rise. Since the start of September last year, the correlation between the 2yr EZ-US bond differential and EUR/USD has been 0.1%, indicating virtually no explanatory relationship between relative short-run monetary policy expectations and the exchange rate. This fall in the euro may therefore be a ‘knee-jerk’ reaction”.
EUR/USD Levels
The 20 DMA is 1.3809, the 50 DMA is 1.3698 and the 200 DMA is 1.3490. RSI (14) reads 34.25. Supports are ascending from 1.3720 and 1.3749. Spot is 1.3784 while resistances are 1.3805, 1.3843, 1.3880 1.3899 and 1.3930.