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4 May 2013
Forex: EUR/USD's roller coaster but pair remains at the same levels; what's to come?
FXstreet.com (San Francisco) - As first reaction following the better than expected US April employment report, the EUR/USD jumped to 1.3147, but it was just a moment when the pair gave away more than 100 pips to the 1.3034 and then to bounce again to a new intra-day high at 1.3160. After that, the story was over with the pair trading water around 1.3100, closing at 1.3115, 0.38% above opening price.
The US nonfarm payrolls surprised investors as the April data came in above market consensus, at 165K instead of 145K. Also, March weakness was revised higher by 50K, from 88K to 138K. But more important was the Department of Labor's revision of the data published since 2010 with the addition of a total of 1.3 million new jobs from 2010 onwards.
As the FXstreet.com's analyst Valeria Bednarik pointed in a recent report, "the EUR/USD continues mounted in a roller coaster, nose diving to 1.3032 where it set a double floor with yesterday low, on up beating US employment figures," but it is also true that the pair remains inside its range between the major levels around 1.3000 and 1.3200.
However, the EUR/USD closed on Friday its six positive day of the last eight, and its third week of gains of the last five. "The resilience of the euro continues to impress us," comments BK Asset Management's analyst Kathy Lien. "Despite the ECB's rate cut on Thursday, the European Commission's downgraded GDP forecasts and stronger than expected U.S. data, the euro traded higher against the U.S. dollar. The 1.30 level continues to provide support for the currency pair.”
What's next for the EUR/USD?
Next week’s economic calendar won't be as much important as the past five days. So market wouldn't be too impressed about the next reports. With the EUR/USD closing at 1.3115, the pair is trading strongly bullish according to the FXstreet.com trend index. Indicators such as MACD, CCI and Momentum are pointing to the north while the Stochastic is neutral in the 1-day chart.
As for the short term, a break above 1.3220 (high May 2) would open the door to 1.3231 (daily cloud top) and then 1.3243 (high May 1). On the flip side, support levels line up at 1.3033 (low May 3) ahead of 1.3015 (low Apr.29) and then 1.3000 (MA30d).
However, the long term remains bearish and the upside is limited according to the FXstreet.com latest pool of experts. The EUR/USD rises are not a done deal, as the quarterly view tends to sub 1.30. Lien thinks that investors will remain optimistic throughout the next week. “This means a test of 1.30 is likely but 1.2950 is key.”
Among this lines, Forex.com's analyst Kathleen Brooks agrees that the EUR/USD will trade on range in the middle term. "The EUR’s sharp fall in volatility supports this cross remaining range bound, and without a significant increase in volatility we may not see EURUSD break out of its 1.2950 – 1.3210 range."
Moving forward to Monday’s docket, Services PMI prints in China and the euro area will be in the limelight, ahead of the Sentix index and Retail Sales in the bloc, all preceding the speech by ECB President M.Draghi. No data are expected across the pond but a 3m and 6m Bill Auction.
As for the rest of the week, RBS and BoE policy meeting will be the key events. Besides that, the Eurozone retail sales, German and Britain industrial production, unemployment rate in Canada and claims in the United States will draw market's attention.
The US nonfarm payrolls surprised investors as the April data came in above market consensus, at 165K instead of 145K. Also, March weakness was revised higher by 50K, from 88K to 138K. But more important was the Department of Labor's revision of the data published since 2010 with the addition of a total of 1.3 million new jobs from 2010 onwards.
As the FXstreet.com's analyst Valeria Bednarik pointed in a recent report, "the EUR/USD continues mounted in a roller coaster, nose diving to 1.3032 where it set a double floor with yesterday low, on up beating US employment figures," but it is also true that the pair remains inside its range between the major levels around 1.3000 and 1.3200.
However, the EUR/USD closed on Friday its six positive day of the last eight, and its third week of gains of the last five. "The resilience of the euro continues to impress us," comments BK Asset Management's analyst Kathy Lien. "Despite the ECB's rate cut on Thursday, the European Commission's downgraded GDP forecasts and stronger than expected U.S. data, the euro traded higher against the U.S. dollar. The 1.30 level continues to provide support for the currency pair.”
What's next for the EUR/USD?
Next week’s economic calendar won't be as much important as the past five days. So market wouldn't be too impressed about the next reports. With the EUR/USD closing at 1.3115, the pair is trading strongly bullish according to the FXstreet.com trend index. Indicators such as MACD, CCI and Momentum are pointing to the north while the Stochastic is neutral in the 1-day chart.
As for the short term, a break above 1.3220 (high May 2) would open the door to 1.3231 (daily cloud top) and then 1.3243 (high May 1). On the flip side, support levels line up at 1.3033 (low May 3) ahead of 1.3015 (low Apr.29) and then 1.3000 (MA30d).
However, the long term remains bearish and the upside is limited according to the FXstreet.com latest pool of experts. The EUR/USD rises are not a done deal, as the quarterly view tends to sub 1.30. Lien thinks that investors will remain optimistic throughout the next week. “This means a test of 1.30 is likely but 1.2950 is key.”
Among this lines, Forex.com's analyst Kathleen Brooks agrees that the EUR/USD will trade on range in the middle term. "The EUR’s sharp fall in volatility supports this cross remaining range bound, and without a significant increase in volatility we may not see EURUSD break out of its 1.2950 – 1.3210 range."
Moving forward to Monday’s docket, Services PMI prints in China and the euro area will be in the limelight, ahead of the Sentix index and Retail Sales in the bloc, all preceding the speech by ECB President M.Draghi. No data are expected across the pond but a 3m and 6m Bill Auction.
As for the rest of the week, RBS and BoE policy meeting will be the key events. Besides that, the Eurozone retail sales, German and Britain industrial production, unemployment rate in Canada and claims in the United States will draw market's attention.