31 Oct 2013
EUR/USD downwards on Nowotny Comments, less dovish FOMC than expected
FXstreet.com (Athens) – The EUR/USD is trading under pressure since the kick off of the European trading session, as ECB’s Nowotny made his best efforts to put the single currency under further stress, pointing out through news wires that “"there will be further liquidity provision."
EUR/USD under pressure as Nowotny talks on further liquidity provision, while ‘Decemtaper’ is back on the backdrop
The EUR/USD was abruptly dragged down of the 1.3700 handle after ECB’s Nowotny stated that since LTRO’S are on their end, “it must be avoided to fall off cliff as LTRO comes to an end,”, as well as “there will be further liquidity provision.” The cross had been under severe pressure since the kick off of the Wellington trading session after the yesterday’s less dovish than expected FeD, but after Nowotny’s statement, a series of stop-loss orders got triggered, pushing further downwards the pair to the area of 1.3688, a new weekly low. Today we are ahead of a heavy load of Euro zone data, but probably the crucial point is that the cross is very vulnerable now as markets have to price in the December tapering probability, even if it’s still a very modest one. Briefly, yesterday Fed managed to baffle traders as while left intact its quantitative easing policy, also left market participants taken aback by the fact that Fed officials amidst an environment of a US sluggish economy and the 16-day governmental shutdown - alongside with the fiscal insanity – preferred to emphasize a glass half full approach. Therefore, taken for granted that Fed is data dependent, market participants should take a careful look on the NFP data next week, to consider if the modest probability of Fed tapering on December will have any chance to become a reality.
Technical Aspects on the EUR/USD
Karen Jones Head Technical Analyst of Commerzbank, mentions that the “EUR/USD is pulling back from the 61.8% retracement of the move down from 2011 (at 1.3833). Directly above here lies the top of the channel at 1.3874 and this represents the last defense for the major resistance at 1.3958/1.4002 band, which represents the 50% retracement of the move down from 2008 and the 2008-2013 resistance line. We note the 13 count, the TD perfected set up on the daily and the 13 count on the weekly chart (we last saw this in 2008).”
EUR/USD under pressure as Nowotny talks on further liquidity provision, while ‘Decemtaper’ is back on the backdrop
The EUR/USD was abruptly dragged down of the 1.3700 handle after ECB’s Nowotny stated that since LTRO’S are on their end, “it must be avoided to fall off cliff as LTRO comes to an end,”, as well as “there will be further liquidity provision.” The cross had been under severe pressure since the kick off of the Wellington trading session after the yesterday’s less dovish than expected FeD, but after Nowotny’s statement, a series of stop-loss orders got triggered, pushing further downwards the pair to the area of 1.3688, a new weekly low. Today we are ahead of a heavy load of Euro zone data, but probably the crucial point is that the cross is very vulnerable now as markets have to price in the December tapering probability, even if it’s still a very modest one. Briefly, yesterday Fed managed to baffle traders as while left intact its quantitative easing policy, also left market participants taken aback by the fact that Fed officials amidst an environment of a US sluggish economy and the 16-day governmental shutdown - alongside with the fiscal insanity – preferred to emphasize a glass half full approach. Therefore, taken for granted that Fed is data dependent, market participants should take a careful look on the NFP data next week, to consider if the modest probability of Fed tapering on December will have any chance to become a reality.
Technical Aspects on the EUR/USD
Karen Jones Head Technical Analyst of Commerzbank, mentions that the “EUR/USD is pulling back from the 61.8% retracement of the move down from 2011 (at 1.3833). Directly above here lies the top of the channel at 1.3874 and this represents the last defense for the major resistance at 1.3958/1.4002 band, which represents the 50% retracement of the move down from 2008 and the 2008-2013 resistance line. We note the 13 count, the TD perfected set up on the daily and the 13 count on the weekly chart (we last saw this in 2008).”