EUR Trading Outlook
The Euro (EUR) a dip below 1.3300 did not last long and the pair finished at 1.3330 with some mixed news overnight. Eurobond Auctions were strong overnight and the ISDA Ruled that recent Greek Debt deal did not constitute a default. February CPI at 2.7% y/y. January Unemployment increased to 10.7% in the Eurozone.
The Euro (EUR) the big news in the European session was the second LTRO which saw 530bn lent out to 800 European banks. The market didn’t really react however as 500bn was expected and had already rallied to the day before. The failure to break above 1.3500 and the stronger USD in the US session sent the major on a dramatic fall to 1.3300. The uptrend is under threat and a break below 1.3300 could lead to further losses while stabilization should lead to a new short term range been formed. Also ahead, February PMI forecast at 49. Also January Unemployment forecast at 10.4%. From the US, Weekly Jobless Claims forecast at 351k vs. 351k previously. February ISM manufacturing is forecast at 54.5 vs. 54.1 previously. Also Fed Chief Bernanke speaks again before the Senate Banking Committee.
The Euro (EUR) the Euro fell going into Europe as the ECB suspended accepting Greek bonds as collateral but given the relatively small size of this asset and expectations of a strong take up of lending tomorrow the bulls are looking to retest 1.3500 in Asia on Wednesday. How the EUR/USD will react tonight to the second LTRO is up for debate with a strong pickup suggesting bank stress still exists but also offering a short term solution to this issue. Looking ahead, German Unemployment Change is forecast at -5k vs. -34k previously. Also ahead, February Chicago PMI is forecast at 61.5 vs. 60.2 previously. Also Fed Chief Ben Bernanke Speaks.
The Euro (EUR) the weakness against the USD was amplified against the Yen which slumped over 200pips overnight with a dramatic reversal after running up to Y110 in recent weeks. The move looks like profit taking but the downgrade of Greece to selective default has caused some uncertainty going into Europe with many investors wanting to know what this would mean for credit markets. Looking ahead, February Eurozone Consumer Sentiment forecast at -20.2 vs. -20.7 previously. Also ahead US January Durable Goods Orders forecast at -1% vs. 3% previously.
The Euro (EUR) the EUR/USD continued to push higher after breaking out on Thursday last week above 1.3300. The 1.3500 level should also slow the ascent with some concerns remaining about Eurozone bailouts which go to the vote in Germany and other EU countries in coming weeks. Looking ahead, January M3 Money Growth forecast at 1.8% vs. 1.6% previously. Also ahead January Home Sales forecast at 1% vs. -3.5% previously.
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