4 Jul 2013
EUR/USD lingers at 1.30, awaits the ECB
FXstreet.com (Barcelona) - As a magnet, the EUR/USD came back to the all familiar 1.30 handle ahead of today's big risk event ECB monetary policy decision, with the central bank not expected to make any significant announcement.
In view of Kathy Lien, Co-Founder at BK Asset Management, "the bounce in the euro can be attributed to the pullback in Portuguese 10 year bond yields, which hit a high of 7.977% before settling down at 7.33%, up 68bp for the day."
"I expect Draghi to again underline the variety of options available to the ECB without actually committing to any at this meeting," suggests Phil McHugh, Trade Manager Currencies Direct.
Mike Jones, FX Strategist at BNZ, sees the upcoming ECB rate decision and President Draghi press conference as negative for the interest of the Euro, expecting Draghi to "maintain a dovish tack (talking up non-conventional policies)."
Jones also comments on the recent broad-based volatility in Europe, including equities, bonds and even the Euro, as events that will provide comfort to Draghi. Jones thinks "the stage may be set for the EUR to head lower and more fully reflect the recent tick-up in peripheral yields", with the BNZ forecast being for a slide to 1.2700 in Q3.
Amid the fluid political uncertainty in Portugal, coupled with mixed EU data and volatility in the financial markets, Lien is led to believe that "Draghi will retain an open mind on non-standard monetary policy measures including negative deposit rates and remind investors that they are in a very different position from the Fed and as such will keep rates low as long as necessary."
In short, Lien does not think "Draghi will have anything kind to say for the euro and if his level of dovishness increases, it could drive the currency pair to 1.29; In the off chance that he surprises with optimism, 1.30 could become a bottom for EUR/USD."
Technically for the EUR/USD, Jim Langlands, Founder at FXCharts, provides the key levels. On the downside, Langlands sees "a continuation of the decline to below the Fibo support and then today’s 1.2922 low would head to 1.2900, ahead of important 50% Fibo support of 1.2042/ 1.3710 at 1.2876 and then the weekly cloud support at 1.2840." On the topside, Langlands tips "sellers will now appear at 1.3030, above which would see a return to 100 DMA, now at 1.3050, above which the resistance is strong. 1.3075/85 (200 DMA / 23.6% of 1.3415/1.2985) will be the first hurdle ahead of 1.3100 which will be difficult to break."
In view of Kathy Lien, Co-Founder at BK Asset Management, "the bounce in the euro can be attributed to the pullback in Portuguese 10 year bond yields, which hit a high of 7.977% before settling down at 7.33%, up 68bp for the day."
"I expect Draghi to again underline the variety of options available to the ECB without actually committing to any at this meeting," suggests Phil McHugh, Trade Manager Currencies Direct.
Mike Jones, FX Strategist at BNZ, sees the upcoming ECB rate decision and President Draghi press conference as negative for the interest of the Euro, expecting Draghi to "maintain a dovish tack (talking up non-conventional policies)."
Jones also comments on the recent broad-based volatility in Europe, including equities, bonds and even the Euro, as events that will provide comfort to Draghi. Jones thinks "the stage may be set for the EUR to head lower and more fully reflect the recent tick-up in peripheral yields", with the BNZ forecast being for a slide to 1.2700 in Q3.
Amid the fluid political uncertainty in Portugal, coupled with mixed EU data and volatility in the financial markets, Lien is led to believe that "Draghi will retain an open mind on non-standard monetary policy measures including negative deposit rates and remind investors that they are in a very different position from the Fed and as such will keep rates low as long as necessary."
In short, Lien does not think "Draghi will have anything kind to say for the euro and if his level of dovishness increases, it could drive the currency pair to 1.29; In the off chance that he surprises with optimism, 1.30 could become a bottom for EUR/USD."
Technically for the EUR/USD, Jim Langlands, Founder at FXCharts, provides the key levels. On the downside, Langlands sees "a continuation of the decline to below the Fibo support and then today’s 1.2922 low would head to 1.2900, ahead of important 50% Fibo support of 1.2042/ 1.3710 at 1.2876 and then the weekly cloud support at 1.2840." On the topside, Langlands tips "sellers will now appear at 1.3030, above which would see a return to 100 DMA, now at 1.3050, above which the resistance is strong. 1.3075/85 (200 DMA / 23.6% of 1.3415/1.2985) will be the first hurdle ahead of 1.3100 which will be difficult to break."