Back
13 May 2013
Euro's focus shifted to the downside
FXstreet.com (Córdoba) - Following a couple of weeks loaded with euro negative events – ECB cut rates and hinted at negative deposit rate – and strong US data, the EUR/USD came under selling pressure and pierced the bottom of its recent range to hit a 1-month low on Friday, after failing to make an upside break.
The growing economic divergence between the eurozone and the US is taking its toll on the cross, as robust data on the west side of the Atlantic, fuels expectations the Federal Reserve may start to withdraw non-conventional measures later this year.
Meanwhile in Europe, the weak economic development is now also fueling a debate about moving away from austerity measures in favor of stimulating growth and the ECB seems more leaned to support this purpose.
"The focus on US numbers this week means those outcomes should be key in determining whether EURUSD stretches to fresh monthly lows", says TD Securities team.
Technically speaking, the shared currency outlook has also turned bearish, with EUR/USD having broken below the 50– and 200-day moving averages, which now act as resistance (1.2985/1.3000). A break below 1.2934 (last week monthly low) would open the way for a retest of 1.2746 (2013 low).
On the other hand, the euro need to regain the 1.3065 zone (21-day SMA) to ease the short-term pressure, while the outlook could improve should EUR/USD decisively breaks above 1.3200.
The growing economic divergence between the eurozone and the US is taking its toll on the cross, as robust data on the west side of the Atlantic, fuels expectations the Federal Reserve may start to withdraw non-conventional measures later this year.
Meanwhile in Europe, the weak economic development is now also fueling a debate about moving away from austerity measures in favor of stimulating growth and the ECB seems more leaned to support this purpose.
"The focus on US numbers this week means those outcomes should be key in determining whether EURUSD stretches to fresh monthly lows", says TD Securities team.
Technically speaking, the shared currency outlook has also turned bearish, with EUR/USD having broken below the 50– and 200-day moving averages, which now act as resistance (1.2985/1.3000). A break below 1.2934 (last week monthly low) would open the way for a retest of 1.2746 (2013 low).
On the other hand, the euro need to regain the 1.3065 zone (21-day SMA) to ease the short-term pressure, while the outlook could improve should EUR/USD decisively breaks above 1.3200.