EUR/USD Today – 2012/10/05

October 5, 2012 in Forex Analysis

EUR/USD moved up very strongly yesterday. The upward sentiments were visible earlier during the day but those were fueled during ECB President Mario Draghi’s Press Conference and the currency pair went as high as 1.3031 after breaking over the psychological 1.3000 level.

Since then EUR/USD has gone into a sideways mode below 1.3031 and over 1.3007. The previous psychological resistance of 1.3000 has started acting as support.

EUR/USD Hourly Chart:

 

EURUSD Hourly Chart October 5 2012 0330 GMT

What Caused The Upward Jump:

More or less Draghi’s comments were on the same lines as during the earlier press conference when it was announced that ECB is ready to go for unlimited Bond purchase to help the debt crisis. Yesterday Mario Draghi mentioned that European Central Bank is ready to go ahead with the bond buying plan if the nations in question meet the conditions fro the rescue plan by necessary plans of economic reforms.

Actually speaking there was nothing new in the comments as all other factors remain the same i.e. Spain is still hesitating to ask for the help with the conditions attached. The high unemployment issues remain same, the manufacturing sector has been seeing a downtrend and  all such factors which point towards bearish view about Euro zone and hence Euro as such. But such jumps indicating the underlying hopes that Euro is simply to big to fall as any failure on that account will have global impacts which may cause bigger shocks than the Lehman shock.

EUR USD – What to Expect

 

Today is the day of Non-farm payroll report from U.S. The report is scheduled to be released at GMT 12:30. The Unemployment report will also be released at the same time. As it happens that most of the time traders go little slow before the non-farm payroll report and market volatility generally remains lower. Considering the very strong jump of yesterday, today we expect the volatility of be lower before the nonfarm payroll release. The volatility may go little higher just below the report and higher after the release.

The previous non-farm release figure was 96K and the consensus are bullish for the rise towards 113K. Any lower figure may bring further upward jump. The break of 1.3000 had taken place after a wait of 10 trading days and hence on the upside that momentum of bullish sentiments may take EUR/USD towards 1.3080/1.3085 resistance zone.

While saying the above, we do not ignore the possibilities of some consolidation towards 1.2880 before the releases. A weaker non-farm and unemployment reports may take EUR/USD toward the support of 1.2920/1.2930.

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