6 May 2014
EUR/USD consolidates above 1.3900
FXStreet (Edinburgh) - The shared currency is now looking to consolidate the recent advance above the 1.3900 mark, taking the EUR/USD to the 1.3930/35 area.
EUR/USD all eyes on the ECB
The most important event for the EUR will undoubtedly be the ECB gathering on Thursday, which is growing in importance pari passu with the appreciation of the exchange rate. Consensus amongst traders are well divided between those who expect the central bank to break the recent inaction and those who are kicking the can down to the June meeting to see the ECB act. “We expect no change in interest rate policy; however recognize that as the EUR climbs the risks increase. President Draghi’s framework notes that any tightening in monetary conditions(including a higher EUR) will be met with an interest rate cut… At the April meeting, EUR was trading at 1.37, it is now above 1.39; certainly opening the door to a potential cut (particularly with subdued inflationary pressures)”, assessed Camilla Sutton, Chief FX Strategist at Scotiabank.
EUR/USD relevant levels
At the moment the pair is up 0.42% at 1.3924 with the next hurdle at 1.3956 (high May 6) ahead of 1.3967 (2014 high Mar.13) and finally 1.4000 (psychological level). On the downside, a breach of 1.3873 (low May 6) would target 1.3865 (low May 5) en route to 1.3855 (10-d MA).
EUR/USD all eyes on the ECB
The most important event for the EUR will undoubtedly be the ECB gathering on Thursday, which is growing in importance pari passu with the appreciation of the exchange rate. Consensus amongst traders are well divided between those who expect the central bank to break the recent inaction and those who are kicking the can down to the June meeting to see the ECB act. “We expect no change in interest rate policy; however recognize that as the EUR climbs the risks increase. President Draghi’s framework notes that any tightening in monetary conditions(including a higher EUR) will be met with an interest rate cut… At the April meeting, EUR was trading at 1.37, it is now above 1.39; certainly opening the door to a potential cut (particularly with subdued inflationary pressures)”, assessed Camilla Sutton, Chief FX Strategist at Scotiabank.
EUR/USD relevant levels
At the moment the pair is up 0.42% at 1.3924 with the next hurdle at 1.3956 (high May 6) ahead of 1.3967 (2014 high Mar.13) and finally 1.4000 (psychological level). On the downside, a breach of 1.3873 (low May 6) would target 1.3865 (low May 5) en route to 1.3855 (10-d MA).