FXstreet.com (San Francisco) - One month and 745 pips later, the EUR/USD has been brought to earth from the February 1st high at 1.3710 to Friday March 1st bottom at 1.2965. However, the euro managed to recover some ground and following the US President Barack Obama speech on 'sequester', the pair has closed above the 1.3000 key level. Is time for bears now? Let see...
The EUR/USD closed Friday at 1.3020, around 0.30% negative on the day. In the 1-day chart, MACD, CCI and Momentum indicators points bearish while Stochastic is bull. In a wider windows the picture changes as MACD, CCI and Momentum are bullish with a stochastic neutral in the 1-day timeframe.
It seems there are signs of a changing trend as the EUR/USD has experienced 4 weeks of losses and the BPI is indicating that EUR is rising from 15.79 and the USD is above the 90 level. However, according to the FXstreet.com EUR/USD Forecast, the mid and long-term forecasts for the euro are 300 pips lower than last week.
According to TD Securities FX analysts Shaun Osborne and Greg Moore, there is still hope for Euro bulls if the pair remains above the 1.28/29 area. “Four weeks of successive losses keeps the EUR on track to test the 1.28/1.29 area (40-week/200-day MA/neckline of the huge, multi-month inverse H&S neckline that drove our late 2012/early 2013 bullishness on the EUR).”
“Holding this support zone (we can tolerate some temporary weakness below) is vital in sustaining a longer-term bull outlook,” state both analysts.
But what’s going on in the fundamental area? Sequester is fueling the risk aversion and the USD is joining it due its safe haven status. Meanwhile, the Italian disaster is looming in the Euro sentiment. As UBS’ analysts Geoffrey Yu and Manik Narain well said in a recent report, “it will be interesting to see how the ECB responds after the Italian election and a return in risk aversion. ”
Expectations will be the theme in the coming week as the RBA, BoC, ECB, BoE, and BoJ are expected to hold policy meetings. Beside Mario Draghi, nominated BoJ governor Haruhiko Kuroda will have his first speech and market will pay special attention on what he will say to support, or not, the JPY weakening. USD/JPY finished the week above the 93.50 level.
On the North American side, President Barack Obama said that the U.S. “will get through this, will not be an ‘Apocalypse’”. Earlier in the session, House Speaker John Boehner affirmed that there is still time to reach an agreement during the incoming week. Meanwhile, both Republicans and Democrats continue to kick the can down to each others backyard.
The Banking Week Ahead
As noted before, RBA, BoC, ECB, BoE, and BoJ will publish their monetary policy decisions. Despite some market voices are asking for a rate cut in the ECB, major expectations are that Draghi and his team will maintain his refi rate unchanged. The point of salt will come with the president’s press conference.
US unemployment data and its Non Farm Payrolls, the European, Australian and Japanese Q4 GDP and the size of the BoE’s APF will also take the market attention.
- ECB Interest Rate Decision (Mar 07 12:45 GMT)
- BoE Interest Rate Decision (Mar 07 12:00 GMT)
- BoJ Interest Rate Decision (Mar 07 02:00 GMT)
- U.S. Unemployment Rate (Mar 08 13:30 GMT)
- U.S. Nonfarm Payrolls (Mar 08 13:30 GMT)