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FX Headlines: Euro Advance to be Short-Lived as Upside Momentum Slows

FX Headlines: Euro Advance to be Short-Lived as Upside Momentum Slows

2011-02-01 13:00:00
Michael Wright, Currency Analyst
Share:
Euro_Advance_to_be_Short-Lived_as_Upside_Momentum_Slows_body_fxheadlines.jpg, FX Headlines: Euro Advance to be Short-Lived as Upside Momentum SlowsEuro_Advance_to_be_Short-Lived_as_Upside_Momentum_Slows_body_fxb.png, FX Headlines: Euro Advance to be Short-Lived as Upside Momentum Slows

Fundamental Headlines

Egyptians Gather in Main Square – Wall Street Journal

EU, U.S Clamp Down on Belarus – Wall Street Journal

Investors Return to Risk as Egypt Fears Ease – Financial Times

Fed’s Easy Money Helps European Banks Refinance – Bloomberg

Derivatives Plan for European Watchdog May Exceed EU Power – Bloomberg

EURUSD: Germany’s unemployment change for the month of January fell 13K after rising a revised 1K the month prior amid economists’ expectations of -10K. At the same time, the unemployment rate fell to 7.4 percent from 7.5 percent in December to mark the lowest level since November 1992. The drop in the number of unemployed individuals pushed lower for the 17th time in the past 18 months. The gain in the labor force is partially attributed to the governments working scheme which pays subsidies to employers to retain employees. Though the reading bodes well for the region, additional improvements at this rate are unlikely due to the fact that growth will slow amid tough austerity measures.

Meanwhile, the unemployment rate in the 17 member euro area remained unchanged at 10.0 percent during the month of December. Looking ahead, currency traders will place their focus on producer prices which will be released tomorrow at 10:00 GMT. Expectations as of late are for an annualized increase of 5.2 percent. However, the highly anticipated ECB rate decision will likely dictate euro price action as the single currency remains at the crossroads. Though the central bank is widely expected to keep rates unchanged at 1.00 percent, comments subsequent to the decision will likely dictate price action. Not to overlook, debt auctions from both Portugal and Spain will also cross the wires.

Taking a look at price action, the EURUSD continues to push higher, but the advance may be short-lived as upside momentum is slowing. On the hourly chart, the pair is trading in a narrow rising channel. Therefore, traders looking for a turnaround in the pair may want to key into the 1.37 area. A break and close below this level may warrant concern.

Written by Michael Wright, Currency Analyst

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Michael Wright is the author of FX Headlines, Fundamentals vs. Technical’s, Weekly Spotlight, and Forex Trading Weekly Forecast

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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