EUR/USD: technicals and fundamentals
US dollar got a lift last week from good GDP and nonfarm payrolls data (204K vs. 121K). Now economists say that we have to be sure that there really is a positive trend in economy and labor market. If there is, the market will start speculating that the Fed may start QE tapering already in December. The Fed’s Chairperson Designate Yellen is going to testify on Thursday.
The pair retraced more than 50% of its Friday’s fall, but is on the verge of breaking below the daily Ichimoku Cloud. There’s some consolidation going on H1 and H4 charts. Support lies at $1.3312/3295 (50% Fibo of the advance from July to October, 200-week MA). Resistance is at $1.3420, $1.3450, $1.3500, $1.3547.
Analysts at Barclays Capital believe that diverging monetary policy outlook will be driving EUR/USD lower in the medium term. In the near term, however, one has to bear in mind that the ECB members Weidmann, Asmussen and Nowotny are due to speak today. According to Financial Times, all of them voted last week against cutting the refi rate, so their comments may actually provide euro some support. In addition, the euro area will release inflation and flash GDP this week. Upward revision in inflation would be EUR-positive, though UBS warns EUR bulls against being too hopeful.
Chart. Daily EUR/USD