EUR/USD Today – 2012/9/28

September 27, 2012 in Forex Analysis

EUR/USD Today:

Today’s outlook for EUR/USD: Yesterday was another mixed day for EUR/USD. The pair had gone down to 1.2828 i.e. 2 pips below the first profit target mentioned in our daily technical analysis but then had jumped strongly by 100 pips to 1.2928.

EUR/USD Daily Chart:

EUR/USD Today - Daily Euro - US Dollar Chart

 

Market Highlights:

1) Greece: Greek Prime Minister could get a nod of agreement from the political coalition partner parties for budget cuts to meet the conditions for receiving the international aid. This was just the first step in the negotiations as it came with the conditions of having the sound growth plans, additional time line of 2 years for the reforms and alternatives for the budget if the economic recovery is faster than expected. While it was the first sign of optimism but it is still only the first sign. We also need to keep the facts at the back of mind that on one side budget cuts would have direct positive impact on the economic reforms but the negative side effects of the cuts in budgets and austerity measures will always be there simultaneously. Money flow is ultimately the measure of the health of an economy. Extremely high unemployment rate of over 25% in Greece also does not offer a positive picture.

2) Spain: A positive step to balance the needs for economic reforms by further austerity measures by cutting the spending under several heads while simultaneously trying to keep the public unrest in control by increase of 1% in pension payments.

3) Euro zone economic releases: German Unemployment Report: The unemployment report from Germany went into the favor of Euro. The report (9K) was better than the consensus of 10K and previously released data of 11K. On the other hand the reports from Euro zone related to business conditions were weak.

4) US economic releases: The reports about durable goods orders came quite weak but the reports about jobless claims were slightly positive.

What to expect from EUR/USD today:

Overall outlook stays bearish but the sentiments driven near-term outlook stays mixed because the sentiments themselves are mixed.
The current resistance is coming near 5day EMA and the price seems to be hesitating there (please check the daily chart of EUR/USD above in which the green line is 5-day EMA, yellow is 22-day and red is 55-day EMA). This itself does not reflect any positive sentiments but in case there is a decisive break of this resistance then some more upward consolidation towards 1.2970/1.2980 cannot be ignored. Around that level the psychological resistance of 1.3000 would come in picture and a break of that is must to expect any substantial near-term gains for EUR/USD.

On the other hand if the resistances hold then further downward move for a retest of first 1.2828 is expected. Any strong break below 1.2820 may take EUR/USD further down towards 1.2740/1.2730 i.e. towards the 55-day EMA support zone. This movement will also represent 38.2% retracement of the recent upward move.

 

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