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EUR/USD Recovery Efforts Continue to Meet Headwinds

EUR
MNI (London)
  • EUR/USD was shoved through $1.2130 support in early NY Thursday, touched a low of $1.2111 before it picked up fresh demand into the 1600GMT.
  • Rate recovered to post a fresh intraday high of $1.2178 as market reacted to Fed Powell's dovish comments, emphasizing a need for a sustained inflation rate above 2.0% before the Fed considers tightening action.
  • Market then moved to adjust positions ahead of President elect Biden comments, coming after the NY market. Rate eased to $1.2147 as UST yields pushed higher, before it settled around $1.2154 into the close.
  • Rate eased to $1.2150 in early Asia, bounced to $1.2163 as Biden began to speak. However, contents of the speech provided no major surprises, the $1.9tln of COVID aid reported ahead of announcement. Market will watch what hurdles this package will run into before it passes.
  • No major reaction seen and EUR/USD drifted off through the balance of the Asian session to $1.2135, some suggesting support back in place at $1.2130, stronger between $1.2110/00, a break to expose the Dec09 low of $1.2059.
  • Resistance now seen between $1.2170/80, a break to open a move back toward $1.2200.
  • Inflation from France and Spain then EZ Trade provide domestic data interest this morning. ECB Visco speaks at 0800GMT.
  • US Retail Sales, Empire Mfg, PPI, IP, Capital Utilisation and UofM the data focus into the afternoon. Fed Kashkari(non-voter, dove) speaks at 1630GMT.
  • MNI Techs: EURUSD is trading closer to recent lows. The move lower since Jan 6 signals the start of a correction that is allowing a recent overbought condition to unwind. Price action this week traded through the 20-day EMA and support at 1.2130, the Dec 21 low. The break exposes the 50-day EMA at 1.2095. Note too that the most recent consolidation appears to be a bear flag, reinforcing bearish conditions. 1.2230 marks initial resistance.
MNI London Bureau | +44 203-586-2231 | john.webb@marketnews.com
BulletMarketsForeign Exchange Bullets
MNI London Bureau | +44 203-586-2231 | john.webb@marketnews.com
BulletMarketsForeign Exchange Bullets

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