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20 Jun 2013
Flash: What now for the EUR/USD? - WIB & Commerzbank
FXstreet.com (London) - Richard Franulovich, Rob Rennie at WIB said that markets were clearly set up for an FOMC statement and press conference yesterday that would soothe anxieties around Fed policy. Instead, they said, we were confronted with a Fed that is giving off much less dovish fumes. “Markets are not used to getting ‘the cold shoulder’ from Bernanke. This makes yesterday’s press conference all the more difficult to digest. But digest we will have to”.
They believe that the USD has now found a strong base here and should see multi-day gains going forward. “In contrast to the Fed’s less dovish tack, Draghi reiterated in the last day or so that the ECB is still very open to providing yet further support in the form of non-standard measures, seemingly backtracking on his message at last month’s ECB meeting. For much of the last few weeks amid the tapering debate USD gains have been narrowly concentrated against the AUD and emerging markets currencies. Coming days should see USD strength on a broader front. EUR looks to be the very obvious short here”. They explain that they find it very hard to believe that EUR can continue sitting in the 1.32 to 1.33 range that it has been in since the beginning of June.
They have therefore added a short EUR/USD position to their ForeX Focus portfolio at current levels (1.3208) and will look to add more on strength to 1.3350. If they are correct in their view, EUR should not trade above the recent high so they will place a stop above 1.3400. The objective on the trade would be for a move back towards important support levels off the April and May lows which come in around 1.2850.
Analyst Karen Jones at Commerzbank said that EUR/USD minor new gains were not confirmed by the daily RSI and directly overhead lays 1.3440/52, the 200-week ma and the 2011-2013 resistance line. She said this is key resistance and they are at last seeing signs of failure.
Currently, she said, the Elliott wave count is suggesting we will see a pullback to 1.3190/1.3125, however they suspect we will see a deeper sell off…the 55+ 200 day moving averages at 1.3077/73 lies at 1.2839/1.2796 which guards the 1.2740 April low. She see’s Initial resistance at 1.3355/85 ahead of 1.3440/52. Current position: Short 1.3367. Recommended trade: Lower stops from 1.3510 to 1.3455. Partially cover 1.3180 and cover the remainder 1.3100
They believe that the USD has now found a strong base here and should see multi-day gains going forward. “In contrast to the Fed’s less dovish tack, Draghi reiterated in the last day or so that the ECB is still very open to providing yet further support in the form of non-standard measures, seemingly backtracking on his message at last month’s ECB meeting. For much of the last few weeks amid the tapering debate USD gains have been narrowly concentrated against the AUD and emerging markets currencies. Coming days should see USD strength on a broader front. EUR looks to be the very obvious short here”. They explain that they find it very hard to believe that EUR can continue sitting in the 1.32 to 1.33 range that it has been in since the beginning of June.
They have therefore added a short EUR/USD position to their ForeX Focus portfolio at current levels (1.3208) and will look to add more on strength to 1.3350. If they are correct in their view, EUR should not trade above the recent high so they will place a stop above 1.3400. The objective on the trade would be for a move back towards important support levels off the April and May lows which come in around 1.2850.
Analyst Karen Jones at Commerzbank said that EUR/USD minor new gains were not confirmed by the daily RSI and directly overhead lays 1.3440/52, the 200-week ma and the 2011-2013 resistance line. She said this is key resistance and they are at last seeing signs of failure.
Currently, she said, the Elliott wave count is suggesting we will see a pullback to 1.3190/1.3125, however they suspect we will see a deeper sell off…the 55+ 200 day moving averages at 1.3077/73 lies at 1.2839/1.2796 which guards the 1.2740 April low. She see’s Initial resistance at 1.3355/85 ahead of 1.3440/52. Current position: Short 1.3367. Recommended trade: Lower stops from 1.3510 to 1.3455. Partially cover 1.3180 and cover the remainder 1.3100