In addition, higher than expected Eurozone PPI suggest that there is ongoing inflationary pressure in the European system, which limits the ECB’s ability to cut interest rates. Today Spain released disappointing labor stats, with unemployment rising by 80k in September. The most important upcoming events for EUR traders are: Thursday’s ECB meeting and Friday’s nonfarm payrolls.
Markets are adding risk to portfolios putting some upward pressures on equities and commodities and downward pressure on the USD. News flow has been quiet, with most of the headlines focused on the RBA decision to cut interest rates by 25bpts. Yesterday’s stronger than expected US ISM is encouraging; however for markets the key inputs will come from tomorrow’s US election debate.
Yesterday’s speech by Chair Bernanke contained no market relevant new information and instead defended QE and suggested that the Fed was in no way monetizing debt due to the ‘temporary’ nature of the asset purchases.
After hitting a 1-week high of 1.2967, EUR/USD lost momentum and retreated slightly as Spanish PM Rajoy said in a press conference that a bailout request was not imminent.
However, the setback was contained by the 1.2935 area, leaving the pair searching for direction in a quiet American session. At the time of writing, EUR/USD is trading at the 1.2940 zone, still up 0.4% on the day.
For the first time since falling from 1.3170, the EUR/USD is showing 2 consecutive days of bullish price action unless it falls sharply to close the 10/2 session under 1.2875, As we observe the rally in the 4H chart, we see that it is cracking a resistance pivot at 1.2960. This opens up last week's highs, which are just under 1.30".
The ability to push above 1.30 exposes the 1.3170 level, though we should monitor the 1.3080-1.3085 pivot area as well for resistance.
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