Forex daily analysis 4th December 2013

The Euro was initially able to hold steady in Europe on Tuesday, bolstered by the ability to hold important

support levels the previous day. The Euro also secured a boost from a better than expected Spanish

unemployment report and managed to push above the 1.3550 level during the European session. There

were still concerns surrounding the inflation profile with a weaker than expected reading for producer

prices keeping underlying downward pressure on inflation.

Forex daily analysis 28th November 2013

The Euro took advantage of dollar selling against Sterling during the European session on Wednesday and broke above the 1.3600 level, briefly triggering fresh gains on stop-loss Euro buying. 

There was further speculation surrounding the ECB with reports that it could consider a fresh LTRO with conditions attached, but the Euro remained resilient into the New York open. 

A coalition deal between the CDU and SPD to form a coalition government provided some underlying Euro support and there was a firm reading for German consumer confidence.

The headline US durable goods data was marginally weaker than expected with a 2.0% monthly decline,

but other data points were better than expected. Jobless claims fell to 316,000 in the latest week from a

revised 326,000 previously, offering some reassurance over labor-market trends, while there was an

upward revision to the University of Michigan consumer confidence index. 

The Chicago PMI index also held comfortably above 60.0 for November at 63.0, maintaining the run of favorable surveys.

Forex daily analysis 10th October 2013

Technical positioning remained important on Wednesday as the Euro remained vulnerable to a correction 

following the second failure to break resistance in the 1.36 region and a drop below 1.3550 triggered 

fresh selling with the pair moving to the 1.3500 area. There were longer-term expectations that the ECB 

would provide additional liquidity through another LTRO. 

There were some hopes that the US would be able to move very tentatively towards a deal over the 

government shutdown and debt ceiling even if it is a stop-gap measure. Underlying uncertainty remained 

high with the volatility seen the short end of the US bond market leading to some speculation over a 

developing dollar shortage and defensive demand for the US currency. 

Fundamental trading opportunity/event risk over the next 24 hours 

There looks to be very little chance of a change in 

rates or quantitative easing at this month’s meeting. 

There is a small chance that there could be a 

statement to reinforce forward guidance.

Euro - Market and analysis overview - Forex daily analysis 7th October 2013

The Euro dipped weaker with the US currency looking for some relief after five days of net losses on a 

trade-weighted basis. The Euro was hampered to some extent by fears that the ECB would move to take 

a more aggressive tone against tighter money-market conditions and could also start to verbally 

intervene against Euro strength, especially if the Euro moves to the 1.40 area against the dollar. In this 

environment, the Euro dipped lower and briefly tested support below 1.3550.

Forex daily analysis 1st October 2013

There was no compromise deal ahead of the US budget deadline and a partial shutdown will now take

place. The immediate market reaction was measured, but concerns will tend to increase if there is 

evidence of a prolonged closure as it would increase the risk of failure to raise the debt ceiling which 

would pose a much bigger market threat. There will be reduced speculation of any Fed tapering of bond 

purchases in October which will tend to curb dollar support. The Euro pushed back to the 1.3550 area 

with Euro-zone concerns making it difficult to extend gains.

There was a weaker than expected flash Euro-zone inflation figure of 1.1% for September from 1.3% 

previously which maintained expectations of a dovish ECB press conference on Wednesday following the 

monthly meeting and an overall accommodative policy stance by the ECB.

Market and analysis overview / Forex daily analysis 26th September 2013

Despite dovish ECB rhetoric, actual monetary policy conditions are still tightening within the Euro area as 

excess liquidity is withdrawn which is preventing any significant Euro selling for now.
The dollar’s vulnerabilities were generally perceived as the greater market threat during Wednesday.
The situation will, however, need to be watched very closely as the Euro-zone economy will be vulnerable to fresh deterioration as policy tightens.
In this context, there will also be the risk of growing political tensions. 

The ECB will need to take this threat very seriously and overall risk premiums are liable to increase.

EUR

The euro (sign: €; code: EUR) is the currency used by the Institutions of the European Union and is the official currency of the euro zone, 

which consists of 17 of the 28 member states of the European Union : 

Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia, and Spain.

The currency is also used in a further five European countries and consequently used daily by some 332 million Europeans.

Additionally, more than 175 million people worldwide—including 150 million people in Africa—use currencies pegged to the euro.

The Euro positioning shift and yield factors

The Euro was again confined to narrow ranges during Friday with resistance close to 1.34 and it edged lower during the US session. Technical considerations had an important influence during the day as the Euro traded close to key resistance levels just above the 1.34 level, including the 200-week moving average. The currency was over-bought on a short-term perspective following strong gains and this combination made it even more difficult to attack resistance levels.

There was further speculation that the Federal Reserve would move to a September tapering of bond purchases and there was some reluctance to sell the dollar aggressively as the Euro dipped to test support below 1.3350 later in the US session. 

The latest betting odds have increased the probability of a September Fed tapering which provided some net dollar support and comments from Fed officials will be watched very closely during this week.

The latest CFTC positioning data recorded a net long speculative Euro position against the dollar for the first time since mid June which will substantially lessen the risk of a further covering of short positions.

The overall positioning was still long dollars which will hamper the US currency even though positions declined for the third successive week. 

The Euro edged lower on Monday while holding above 1.33.

The Euro positioning shift and yield factors, allied with underlying US fundamental trends, will provide dollar support. 

A solid base for the US currency against the Euro should be in place particularly given net global reserve flows which will strongly favour the US dollar. It will still be tough going for the US currency to regain much ground in the short term given that a September Fed tapering has effectively been priced in.

This will be another important week for Sterling with the latest inflation and unemployment data due for release. Following the Bank of England forward guidance released last week, the data will be very important. Any increase in the inflation rate would increase speculation that the MPC will need to raise rates earlier than they would like to while higher unemployment would have the reverse effect. Overall, Sterling will find it difficult to make much headway in the short term.