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4 Jun 2014
EUR/USD challenges highs near 1.3630
FXStreet (Edinburgh) - The single currency is prolonging the bounce off recent troughs in the boundaries of 1.3600 the figure, with the EUR/USD managing to escalate towards the 1.3630 level.
EUR/USD focus on ECB… What else?
The markets have seen mixed-to-lower PMI prints from both the services and manufacturing sectors, downward consumer prices in Germany and ‘in-line’ EMU’s GDP figures for the first quarter. However, spot exhibited its resilience at-above the 1.3600 handle, hinting at a by now vox populi fact: lower refi and/or deposit rates would be largely priced in by market participants in tomorrow’s ECB meeting, leaving the bar for the central bank to surprise markets really high. In this regard, Global Head of FX Strategy at HSBC David Bloom commented, “Some easing is no doubt in the price given the EUR's decline from 1.40 against the USD since the start of May, and there may be some temptation to "sell the rumour, buy the fact". But the significance of any easing on Thursday will be less about the specifics of those actions. It will be whether they, and the associated rhetoric, look like stepping stones to broader quantitative easing later in the year. If they do, we believe the downtrend in the EUR will resume beyond the knee-jerk market noise around the announcement”.
EUR/USD relevant levels
At the moment the pair is up 0.01% at 1.3630 with the initial hurdle at 1.3648 (high Jun.3) followed by 1.3650 (high May 30) and finally 1.3669 (high May 27). On the downside, a dip beyond 1.3586 (low May 29) would open the door to 1.3585 (low Feb.13) and then 1.3563 (low Feb.12).
EUR/USD focus on ECB… What else?
The markets have seen mixed-to-lower PMI prints from both the services and manufacturing sectors, downward consumer prices in Germany and ‘in-line’ EMU’s GDP figures for the first quarter. However, spot exhibited its resilience at-above the 1.3600 handle, hinting at a by now vox populi fact: lower refi and/or deposit rates would be largely priced in by market participants in tomorrow’s ECB meeting, leaving the bar for the central bank to surprise markets really high. In this regard, Global Head of FX Strategy at HSBC David Bloom commented, “Some easing is no doubt in the price given the EUR's decline from 1.40 against the USD since the start of May, and there may be some temptation to "sell the rumour, buy the fact". But the significance of any easing on Thursday will be less about the specifics of those actions. It will be whether they, and the associated rhetoric, look like stepping stones to broader quantitative easing later in the year. If they do, we believe the downtrend in the EUR will resume beyond the knee-jerk market noise around the announcement”.
EUR/USD relevant levels
At the moment the pair is up 0.01% at 1.3630 with the initial hurdle at 1.3648 (high Jun.3) followed by 1.3650 (high May 30) and finally 1.3669 (high May 27). On the downside, a dip beyond 1.3586 (low May 29) would open the door to 1.3585 (low Feb.13) and then 1.3563 (low Feb.12).