According to Valeria Bednarik, Chief Analyst at FXstreet.com, the hourly chart shows indicators are in extreme overbought levels, aiming slightly higher, though price is not following trough.
So far in the Asia-Pacific session, EUR/USD has retraced some of the gains made overnight, last quoted in the 1.3130 area. Farther to the downside, support levels are noted at 1.3110, 1.3070 then 1.3030. To the upside, resistance levels lie at 1.3160, 1.3190 and 1.3220. "Above 1.3160, expect the pair to retest past week high set around 1.3220 area," comments the analyst.
EUR-USD Fundamental Analysis April 17, 2012
The euro was slightly lower against the dollar in Asian trading on Tuesday cooling after an earlier rally stemming from strong retail sales data in the U.S., which sent investors ditching dollar positions in search of higher-yielding assets on hopes for stronger recovery. Technical trading sent the euro up as well before it cooled.
In Asian trading on Tuesday, EUR/USD was trading at 1.3127, down 0.11%, up from a session low of 1.3124 and off from a high of 1.3142.
The pair was likely to find support at 1.2996, Monday's low, and resistance at 1.3213, Thursday's high.
U.S. retail sales figures surprised markets worldwide today, coming in much stronger at a seasonally adjusted 0.8% gain in March, beating expectations for a 0.3% gain, according to the U.S. Commerce Department.
February’s figure was revised down just slightly to a 1.0% gain from a previously reported increase of 1.1%.
Core retail sales, which are stripped of automobile sales, rose by 0.8% last month, above expectations for a 0.6% gain, after rising by 0.9% in February.
The news sparked demand for stocks and more attractive currencies, prompting investors to abandon the safety of the dollar and head out in search of risk.
Strong U.S. retail sales in March should offset weak jobs data for that month, boosting optimism the economy grew a little more strongly than once feared.
Investors shrugged off disappointing manufacturing data out of New York.
The Federal Reserve Bank of New York said that its general business conditions index hit 6.6 in April from 20.2 in March, well below expectations for a reading of 18.0.
However in Spain, yields spiked over 6 percent, which helped temper the euro's gain.
Many market watchers are hoping the European Central Bank will intervene in Spanish bond auctions and ease credit conditions there.
Still, strong retail sales in the U.S. sparked risk-on trading that pumped up the euro before profit-taking ensued.
The euro, meanwhile, was down against the pound and down against the yen, with EUR/GBP trading down 0.08% at 0.8260 and EUR/JPY down 0.14% and trading at 105.54.
In the eurozone later Tuesday, the ZEW Centre for Economic Research is to publish reports on economic sentiment in Germany and for the entire single currency bloc.
The eurozone will release consumer price inflation data, while ECB President Mario Draghi is to speak.
The U.S. government will release data on building permits as well as data on housing starts.
The country will also unveil data on industrial production and the capacity utilization rate, leading indicators of economic strength.
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