We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
EUR/USD
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Oil - US Crude
Mixed
Wall Street
Bearish
Gold
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
GBP/USD
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
USD/JPY
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
More View more
Real Time News
  • Are recent gains in the Indian Rupee and Nifty 50 warranted? Risks are brewing in the background, leaving USD/INR in a consolidative setting as the Nifty pressures resistance. Get your market update from @ddubrovskyFX here: https://t.co/XeIlexZOck https://t.co/rLYsiRLvWJ
  • What's fueling the current rally? Read more - https://t.co/OB1lCFAZLq
  • $EURUSD Daily Pivot Points: S3: 1.1022 S2: 1.1075 S1: 1.1104 R1: 1.1157 R2: 1.1182 R3: 1.1236 https://www.dailyfx.com/pivot-points?ref=SubNav?utm_source=Twitter&utm_medium=DFXGeneric&utm_campaign=twr
  • Among the risk-leaning assets I usually follow, the Yen crosses are proving to be one of the most impressive categories for pace. The $EURJPY stepped on the gas today https://t.co/BYW7vQ7O2G
  • We may see more near-term US #Dollar weakness after my majors-based #USD index (averages it vs #EUR, #JPY, #GBP, #AUD) broke and confirmed the descent through key resistance (1.3213 - 1.3260) as the Greenback faces what may be its cheapest average price since early March https://t.co/pW0cfnc7uS
  • USD/JPY has been a mystery as it has moved basically nowhere of recent despite other USD pairs making sizable moves. Get your $USDJPY technical analysis from @PaulRobinsonFX here: https://t.co/zMLMseWHCi https://t.co/j8azqjhtTL
  • Forex Update: As of 20:00, these are your best and worst performers based on the London trading schedule: 🇦🇺AUD: 1.47% 🇳🇿NZD: 1.25% 🇬🇧GBP: 0.48% 🇪🇺EUR: 0.30% 🇨🇭CHF: -0.17% 🇯🇵JPY: -1.01% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/BxRolsnex3
  • Talk about a disconnect between Main Street and Wall Street. Seems like markets are pricing in an expectation of a V-shaped recovery. Wonder when reality will hit 🤔 https://t.co/Y8woCzT8kN
  • Commodities Update: As of 20:00, these are your best and worst performers based on the London trading schedule: Oil - US Crude: 0.29% Gold: -0.73% Silver: -1.32% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/rsa9fXyvQe
  • $USDJPY Daily Pivot Points: S3: 106.83 S2: 107.22 S1: 107.44 R1: 107.82 R2: 107.99 R3: 108.37 https://www.dailyfx.com/pivot-points?ref=SubNav?utm_source=Twitter&utm_medium=DFXGeneric&utm_campaign=twr
Euro Targets 1.3250 but Difficult with Risk Trends, Italian GDP

Euro Targets 1.3250 but Difficult with Risk Trends, Italian GDP

2013-08-03 03:53:00
John Kicklighter, Chief Strategist
Share:
Forex_Euro_Targets_1_3250_but_Difficult_with_Risk_Trends_Italian_GDP_body_Picture_5.png, Euro Targets 1.3250 but Difficult with Risk Trends, Italian GDP

Euro Targets 1.3250 but Difficult with Risk Trends, Italian GDP

Fundamental Forecast for Euro: Neutral

The euro managed to gain ground against all but one of its major counterparts this past week: the US Dollar. EURUSD is the FX market’s benchmark pair, and its congestion is telling of the conditions for the underlying market. Yet, given the absence of overriding themes like ‘risk trends’ and speculation surrounding the Federal Reserve’s stimulus withdrawal (the Taper), euro-based fundamentals can carry more influence. That will be particularly interesting for pairs like EURUSD or EURJPY prone to breakouts as top tier event risk like the Italian 2Q GDP release cross the wires.

Over the past few weeks, the periphery members of the Eurozone were in focus as potential catalysts for euro-based volatility. The IMF and European Union approving Greece’s latest tranche of aid, Portugal avoiding an early election and thereby deviation from its austerity course, and Cyprus receiving the ‘okay’ from its Due Diligence assessment averted the revival of systemic crisis concerns. Of course, over the past months, there have been a number of events that have not fallen in favor of progress or even status quo. And despite the negative implications, the euro has held steadfast. This may suggest that investor confidence has built up an immunity to regional problems that are not critical.

As the market plays down temporary troubles on the long road to recovery for countries like Greece and Portugal, though, it is important to remember that tremors in the Eurozone’s foundation can add a new element to the region’s stability – not to mention greater short-term volatility. In the coming week, headline event risk comes from the initial (preliminary) reading of 2Q Italian GDP. The Union’s third largest economy has contracted for seven consecutive quarters, and the most recent reading is expected to print another 0.4 percent contraction. A slog is priced in, so meeting expectations is unlikely to generate waves - this past week, Spain reported an extension of its own recession with a 0.1 percent drop for the quarter, and the euro hardly blinked. Yet, in these conditions, even a hearty disappointment may struggle to upgrade a sharp, short-term move to a lasting bear trend.

If a core member’s growth report struggles to muster a heavy reaction from the world’s second largest currency, ‘regular’ event risk will have to try even harder to leverage a meaningful move from the euro. Notable releases to keep an eye on includes the regional service sector activity indicator, German trade, the Sentix Eurozone investor confidence survey, the ECB monthly report and Greek unemployment rate (more at the Economic Docket). With a significant enough ‘surprise’, these updates can generate volatility. However, we shouldn’t expect trends from these headlines unless there is a more convincing theme at play and the releases complements an existing lean.

One consideration for amplifying a fundamental jolt into a bigger market move is to see the docket listing capitalize on proximate technical levels. A great example to start the week is EURUSD’s range between 1.3300 (hemmed by a trendline originating with the May 2011 swing high) and 1.3175 (a collection of technical measures). That is a narrow walkway should winds pick up, and a spike in volatility can ultimately trip a wave of speculative positioning further than data or a news item could alone. Should we be trading on the cusp of this range heading into the Italian growth report, it could pose a serious breakout risk.

Though the threshold for a substantive trend for the euro has been set higher and the scheduled event risk is considered to hold limited influence, there are still sources of turbulence that can return EURUSD to greater extremes like 1.3500 and 1.3000 or send EURJPY above 134 or below 130. To manage such an upgrade in conviction, we would need to tap a deeper well of concern or appetite. A wholesale wave of risk aversion represents an ever-present threat as it can quickly redefine manageable troubles into crises. Alternatively, the same extreme for optimism will be difficult to muster given the rich pricing of low yield / high risk assets. A material return to Eurozone crisis is another lingering possibility. Given the constant probes to market confidence, it would likely have to be a severe deterioration in one of the known issues (Greece heading for the exit) or some as yet unknown and thereby unpriced risk. –JK

Follow me on twitter at http://www.twitter.com/JohnKicklighter

Sign up for John’s email distribution list, here.

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

DISCLOSURES

News & Analysis at your fingertips.