EURUSD Analysis – Week Of 3rd September 2012
Market Sentiment Overview
- Bernanke advises “no net improvement in the unemployment rate since January”, Fed to take “due account” of uncertainties and limits of tools but will do more
- Catalonia region of Spain is downgraded by S&P to junk status
- Spanish 10-year yields +26bps to 6.86%
- Gold finds a bid and moves up +36 to close at $1691 – a near six month high for the precious metal and largest gains in two months
- S&P 500 gains on daily basis (Friday) up 0.6% but closes at 1407, down 0.3% on the weekly basis
- Weekly positioning data from the CFTC COT report shows a broad based dollar selling theme, the EUR FX (CME) is short 102K vs previous 124K
- ECB exec board Coeure advised that the CB is investigating methods of shorter term intervention
The EUR/USD currency pair climbed to an 8-week swing high of 1.2640 yesterday (Friday), but subsequently retraced under the 1.2600 handle and perhaps more importantly the 1.2580 resistance confluence area. If it wasn’t for Bernanke and Jackson hole, news of the Spanish Catalonia region of Spain downgrade by S&P to junk status would have been the headline today. CFTC COT report data shows large specs were once again unloading EUR shorts as the market had a broad based dollar selling theme in play, the EUR FX (CME) is now short 102K vs previous 124K (see COT report chart below); this is a 17% decrease in EUR shorts for the latest reporting period. There has been a marked decrease in EUR shorts since the circa -214k net short position in early June and this trend is supportive of further EUR upside unless any major new data comes to light.
The ECB meeting is the primary focus this coming week. French member of the ECB exec board Benoit Coeure advised that the CB is investigating methods of shorter term bond market intervention. The market is anticipating some kind of announcement from the ECB relating to a bond-buying programme. The ECB is widely expected to reveal details of plans to buy debt in order to push down interest rates paid by eurozone governments when borrowing money. If this is not forthcoming, or does not live up to expectations, the EUR could potentially see downside pressure.
EUR COT Report Chart
cftc cot report 31st august
Source:dailymarkets.com
EURUSD Technical Analysis Update
The hour 4 chart below shows the EURUSD pair broke out of a symmetrical triangle pattern consolidation range during trading on Friday. Price closed the New York session at the previous resistance area which is now seeing support. Price action around this area will be key as the market opens next week as will the 1.2580 resistance confluence area.
- Price moved above the 38.2% Fibonacci retrace of the last major wave lower but once again failed to close above this level on the daily closing basis.
- The 1.2580 area resistance is comprised of this 38.2% Fib and the 100 day SMA a popular moving average.
- A sustained break above this level brings the 50% retrace area into focus around 1.2750 with a prominent price structure swing high preceding and located just under 1.2700.
- The 1.2443 -1.2463 range is a key potential support zone on any failure to sustain current price levels.
- The 100 period SMA is aligned with this support zone and has provided a reasonable level of support in its own right on recent moves lower; this could potentially come into play again.
- The 1.2500 round number level is still in close proximity to price and could yet play a part over the coming sessions. We will be monitoring for price action around 1.2500 should it come into play again.
