EURUSD News: Outlook For The Week Of 4th March 2013
Brad Styles, Forex-FX-4X.com
The euro has experienced its longest run of consecutive weekly basis declines since mid-2012. The Italian election impasse has been a major contributing factor along with soft euro area data likewise weighing on the 17-nation common currency. Concerns around the political uncertainty in Italy outweighed the better-than-anticipated Spanish manufacturing data after Spain’s purchasing managers’ index for manufacturing (February) reached the highest level seen since June 2011.
The latest Eurozone jobless rate data showed an increase in January to the record 11.9% reading, from the prior 11.8% level in December. The Eurozone area continues to battle with recession factors and the consequences of ongoing government cutbacks.
Concerns around the U.S. government’s handling of the sequestration, which could lead to a series of automatic budget cuts, has seen the US Dollar Index rally to the highest level since August 2012. The Dollar Index has gained around 1% to close the week at 82.28 on risk aversion flows. The sheer scale of the sequestration cuts in spending has been outlined by US government officials, who have warned that these cuts would be “deeply destructive” to the economy.
The above has seen the EURUSD currency pair drop under the psychological $1.30 handle and associated price structure support (see our EURUSD Technical Update).
Going forward, this coming week has the Eurozone rate decision as a major event risk scenario on Thursday. There is no immediate expectation for a rate change, nonetheless, market participants will be monitoring the press conference following the key rate announcement. Any hint of a rate cut in April from Mario Draghi could see significant volatility for the 17-nation common currency.
Upcoming Data – Week Of 4th March 2013