FUNDAMENTALS on Euros and Dollars
The Euro is mostly higher as fears are subsiding about a return of the debt crisis that plagued the common currency only months earlier. Industrial production figures were mixed, as France increased but Italy declined.
The euro is now struggling with the $1.2700 watershed.
the euro recovered with the help of scatter talk of official or quasi-official interest. Euro demand on the crosses, especially the yen and Swiss franc was also reported.
After a summer respite from concerns about the solvency of European banks, several countries are once again rattling markets and the euro currency. Most recently news that Ireland may appear to be insolvent has taken center stage. But not to be forgotten is Greece, the epicenter of the financial earthquake which rocked Europe this spring.
Euro buying against sterling and a healthy reception to the Irish bill auction helped the euro recover from the test near $1.2660. Euro needs to surmount formidable resistance in the GBP0.8280-GBP0.8300 band to boost the near-term outlook. Strong Australian jobs data helped drive the Australian dollar to new highs since 5-month
Following last week’s show of health in the shape of reasonable U.S. job creation, investors find themselves at the start of the same cycle witnessed back in the second quarter. Growth around the world appeared to be picking up at the time, while the punishment ailing the euro began to run out of steam. The risk-on rally reflected the disappearance of clouds on the horizon. As we fast forward to today, a similar picture is emerging. The pressure is once again off the U.S. economy as the modest pace of improvement continues. Decoupling is once again emerging as a theme now that a Chinese slowdown has passed the turning point. Once again the emergence of clouds across Europe surrounding a worrisome sovereign debt crisis is detracting from overall risk appetite as the euro and British pound stand out as heavyweights again today.
The tailwinds of the sovereign debt crisis that sank the euro earlier in the year continue to gently whistle across the region. Earlier in the week the Association of German Banks estimated that its top 10 bankers would need to raise €105 billion in fresh capital. Today ECB member Juergen Stark addressing German lawmakers repeated that warnings and noted that state-owned Landesbanks and German savings banks were the greatest threat to sovereign risks. The FT Deutschland newspaper notes that the latter were not subject to the rigors of the recent European bank stress tests.
The Fed’s Beige Book yesterday reported ongoing recovery although at a decelerating pace between mid-July and the end of August. While the risk rally for commodity dollars has seen the dollar lose ground
In short, Both Dollars and Euros are having their very own problems, and the movement of EURO/USD is really depending on the Risk appetite and the general sentiments in upcoming weeks.
TECHNICAL ANALYSIS
Daily Chart with trend line and EW
Daily Chart with Ichimoku
On the Daily chart with Trendline and EW, if we consider that the recent high at 1.3324 being marked as A , its fall on the anticipated Three waves a,b, c, marked in brown lines may be adhered to near term. 1.2916 (50% Fibo) and 1.2478 (0.00 % Fibo ) and 1.2140 as possible next targets. A goes down down to B , whereby B is also considered near c which is the third waves (a,b, c), in the region 1.2140-1.2200
On the Upside, a breach of the upper trendline near 1.2916 shall send this pair retesting the 1.3000 (61.8% Fibo) , follows by 1.3324
On the Daily Chart With Ichimoku , we note that the Ichimoku Cloud bottom support is near 1.2600, breaking this may expose 1.2480 (0.00 Fibo) , then 1.2140, its recent Low.
On the upside, breaching the 1.3020,Ichimoku Cloud Top resistance (it is also near its 61.8% Fibo Retr)shall expose this currency toward 1.3324 , being its recent High.
