11 Jun 2013
EUR/USD technical set up continues to favor further upside
FXstreet.com (Barcelona) - The EUR/USD was able to notch impressive gains to start the week, closing up 68 pips to finish at 1.3255. Economic out of both regions was light to start the week, with French Industrial Production being the main report out of the EU. The print was much better than expected, coming in at 2.2% vs. 0.2% forecast.
Julien Manceaux, Economist at ING went on to discuss further details of the French Industrial Production number, noting there were certain areas of the report which jumped out and helped bring the print back to its highest levels since three years. “French industrial production registered an unexpectedly strong rebound in April, coming back to its 2010 level after a 2.2% MoM jump. This is mostly due to manufacturing where activity increased by 2.6% after a 0.7% drop in March,” Manceaux commented.
David Song, Currency Analyst at Daily FX was looking towards the German court hearing regarding the European Central Bank’s OMT program which is due out tomorrow. Song believes that due to the lack of major economic data being released out of the EU and US at the beginning of the week, this may be the most important event to keep an eye. "The Euro pared the decline following the U.S. Non-Farm Payroll report, with the EURUSD climbing to a high of 1.3268 during the North American trade, but the single currency may come under pressure over the next 24-hours of trading as market participants turn their attention to the court hearing on the European Central Bank’s Outright Monetary Transaction (OMT) program,” Song commented.
Song went on to discuss some details regarding how the German court may be looking to rule on this decision. “As Germany’s constitutional court looks to explore the legality of the non-standard measure, ECB officials are very adamant that the OMT is possible under its current mandate, but the central bank may face increased criticism over the near to medium-term as the governments operating under the fixed-exchange rate system become increasingly reliant on monetary support,” Song concluded. He later went on to note that although it is possible the decision may not have an immediate impact on the EUR/USD, the pair still faces a number of other factors which may limit advances as we head into the back half of the year.
Val Bednarik of FXStreet.com was looking towards the short term time frame charts in order to find key levels which will be important to focus on as we head into the Asia session. She noted the gains late in the New York session were able to extend the pair above key resistance, which will be important to maintain going forward if the bulls want to see additional follow through. “The EUR/USD finally advanced in the US afternoon, grinding above the 1.3245 resistance area after spending most of the day consolidating around the 1.3200 mark. The hourly chart shows technical readings holding in positive territory, although with no upward momentum. Price stability above the 1.3240/50 area is required to confirm more advances, with 1.3300 as immediate resistance level to break,” Bednarik concluded.
The longer term time frame technical picture remains constructive, with both short term moving averages and the RSI (14) maintaining bullish set ups on the daily chart. In fact, the RSI (14) completed a bullish shift last week, building value and closing above the 60 level for the first time since early February. This is often a sign of market that wants to go higher, and could help limit pullbacks over the next few days. There are no patterns currently present on the daily chart, but given the sharp move higher last week, it wouldn’t be surprising to see the pair consolidate gains for a few days and possibly form some type of continuation pattern such as a “bull flag” or “pennant” before taking another leg higher.
Julien Manceaux, Economist at ING went on to discuss further details of the French Industrial Production number, noting there were certain areas of the report which jumped out and helped bring the print back to its highest levels since three years. “French industrial production registered an unexpectedly strong rebound in April, coming back to its 2010 level after a 2.2% MoM jump. This is mostly due to manufacturing where activity increased by 2.6% after a 0.7% drop in March,” Manceaux commented.
David Song, Currency Analyst at Daily FX was looking towards the German court hearing regarding the European Central Bank’s OMT program which is due out tomorrow. Song believes that due to the lack of major economic data being released out of the EU and US at the beginning of the week, this may be the most important event to keep an eye. "The Euro pared the decline following the U.S. Non-Farm Payroll report, with the EURUSD climbing to a high of 1.3268 during the North American trade, but the single currency may come under pressure over the next 24-hours of trading as market participants turn their attention to the court hearing on the European Central Bank’s Outright Monetary Transaction (OMT) program,” Song commented.
Song went on to discuss some details regarding how the German court may be looking to rule on this decision. “As Germany’s constitutional court looks to explore the legality of the non-standard measure, ECB officials are very adamant that the OMT is possible under its current mandate, but the central bank may face increased criticism over the near to medium-term as the governments operating under the fixed-exchange rate system become increasingly reliant on monetary support,” Song concluded. He later went on to note that although it is possible the decision may not have an immediate impact on the EUR/USD, the pair still faces a number of other factors which may limit advances as we head into the back half of the year.
Val Bednarik of FXStreet.com was looking towards the short term time frame charts in order to find key levels which will be important to focus on as we head into the Asia session. She noted the gains late in the New York session were able to extend the pair above key resistance, which will be important to maintain going forward if the bulls want to see additional follow through. “The EUR/USD finally advanced in the US afternoon, grinding above the 1.3245 resistance area after spending most of the day consolidating around the 1.3200 mark. The hourly chart shows technical readings holding in positive territory, although with no upward momentum. Price stability above the 1.3240/50 area is required to confirm more advances, with 1.3300 as immediate resistance level to break,” Bednarik concluded.
The longer term time frame technical picture remains constructive, with both short term moving averages and the RSI (14) maintaining bullish set ups on the daily chart. In fact, the RSI (14) completed a bullish shift last week, building value and closing above the 60 level for the first time since early February. This is often a sign of market that wants to go higher, and could help limit pullbacks over the next few days. There are no patterns currently present on the daily chart, but given the sharp move higher last week, it wouldn’t be surprising to see the pair consolidate gains for a few days and possibly form some type of continuation pattern such as a “bull flag” or “pennant” before taking another leg higher.