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14 Aug 2013
EUR/USD grinds sideways at 1.3263 in advance of key European data
FXstreet.com (Barcelona) - After several days of pullback action, the EUR/USD is treading water leading into what could be several important European economic data releases.
EUR/USD traders will have plenty to digest Wednesday
Is the burgeoning economic recovery really going to take hold? There are fewer and fewer naysayers on Europe as the days / weeks roll by. However, if one or more of the data points like Wednesday’s anticipated releases of German GDP, EuroZone CPI and EuroZone GDP come in surprisingly light, the working theme of European recovery / growth could start to crumble. Even if there is no such deterioration in Europe, it will take a lot to force ECB head, Mario Draghi, to take his foot off the gas pedal. At this point, it would take some type of pressure from a leading EU member like Germany for Draghi to let up.
Meanwhile, we are hearing a growing chorus of hawkish Fed Heads in the US calling for a September commencement of the “tapering” phase of the long-standing QE program. So, we pretty much know at this point that the US FOMC will be taking hawkish action prior to the ECB. The question is now “How long of a lag time will there be before the ECB takes similar steps?”
Technical outlook for EUR/USD
The EUR/USD still looks like it made a top last Thursday at 1.3399 – just shy of the 1.3414 resistance level that leading technicians have pointed to as critical resistance recently. Critical support for the bulls comes in at the 1.3187 level – although Tuesday’s low of 1.3233 will see some buyers trying to enter as well. A cross below 1.3187 will confirm that a top was made last Thursday and that a move down to the 1.2400 – 1.2500 range is under way.
EUR/USD traders will have plenty to digest Wednesday
Is the burgeoning economic recovery really going to take hold? There are fewer and fewer naysayers on Europe as the days / weeks roll by. However, if one or more of the data points like Wednesday’s anticipated releases of German GDP, EuroZone CPI and EuroZone GDP come in surprisingly light, the working theme of European recovery / growth could start to crumble. Even if there is no such deterioration in Europe, it will take a lot to force ECB head, Mario Draghi, to take his foot off the gas pedal. At this point, it would take some type of pressure from a leading EU member like Germany for Draghi to let up.
Meanwhile, we are hearing a growing chorus of hawkish Fed Heads in the US calling for a September commencement of the “tapering” phase of the long-standing QE program. So, we pretty much know at this point that the US FOMC will be taking hawkish action prior to the ECB. The question is now “How long of a lag time will there be before the ECB takes similar steps?”
Technical outlook for EUR/USD
The EUR/USD still looks like it made a top last Thursday at 1.3399 – just shy of the 1.3414 resistance level that leading technicians have pointed to as critical resistance recently. Critical support for the bulls comes in at the 1.3187 level – although Tuesday’s low of 1.3233 will see some buyers trying to enter as well. A cross below 1.3187 will confirm that a top was made last Thursday and that a move down to the 1.2400 – 1.2500 range is under way.