Markets Today – EUR/USD Hesitating Below The Previous High

December 14, 2012 in Forex Analysis

EUR/USD Daily Chart- December 14, 2012 Today’s outlook for EUR/USD: The high on September 17th war 1.3172, the subsequent high on October 17th was 1.3139 which had taken place after a drop to 1.2804. The next high on was on December 5th, which had taken place after a drop to 1.2661. This level was lower than the previous two when EUR/USD failed at 1.3126.

The recent optimism about the Greece crisis and also the progress for joint resolution for the stability of failing banks made the currency pair to have another jump over the psychological 1.3000 and the pair went as high as 1.3119, or 7 pips below the previous high, and seems to be hesitating there.


EUR/USD: Daily chart with Bollinger bands

Fundamental Highlights:

Euro zone crisis: Some optimism has come up because of the progress made for agreement for working a joint resolution for the failing bank under the leadership of ECB and also about the Greece crisis. However, the market might have already taken this optimism in account by the recent upward move. It is like nothing can change tomorrow. Euro has been moving up and down with continuous changes in the sentiments but underlying fears would still continue even when sudden optimism pops-up.

Economic Events Highlights

Today is a day of some important economic releases:
Markit PMI: The preliminary releases for purchasing managers index for manufacturing showed poor data today. It remained constantly poor for European Monetary Union, Germany and France. On the other side the PMI for service sector was came out better than the consensus form all these regions. Overall the effect of the price volatility of Euro is more by manufacturing PMI.

Other upcoming releases: We have Consumer Price Index releases at GMT 10:00 from Euro zone and also the employment change reports at the same time. The previous year on year core CPY was 1.5% and the consensus are that it will remain same. The year on year change in CPI is expected to be 2.2%, down from previous 2.5%. If these reports come better, it may give boost to Euro but any poor data may send EUR/USD for some consolidation.

Economic releases from U.S.:

Consumer Price Index releases from U.S> are due at GMT 13:30 followed by Markit Manufacturing PMI at GMT 13:58 and Industrial Production at GMT 14:15.

What to expect from EUR/USD today:

As we saw above that all subsequent highs have been getting lower since September. The current price action has been finding resistance below the previous high and overall 1.3100 region poses a high resistance. Also, as mentioned above, the upward jump might have already factored the wave of optimism and possibilities of some consolidation cannot be ignored.

Hence, overall we have the recent wave of optimism n one side and the pressure of the resistance zone on the other side. In case the pair breaks above 1.3126 and more importantly 1.3139 then it may go up to retest 1.3171 and with a break of that towards 1.3300 or more. However if these resistances hold than some consolidation towards the support zone of 1.3020/1.3040 should take place.

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