Euro exchange rates forecasted to break lower as 2013 is forecasted to favour the US dollar
The euro (Currency:EUR) is finding Monday morning trade to be a little on the hostile side; at least against our three bellwether currency pairs:
The euro dollar exchange rate is 0.23 pct in the red at 1.3038.
The euro pound exchange rate is 0.04 pct higher at 0.8654.
The euro Australian dollar rate is 0.4 pct lower at 1.4386.
NB: The above quotes are taken from the spot market - your bank will affix their own discretionary spread to the numbers when passing on their currency offer. However, an independent FX provider will guarantee to undercut your bank's offer, thus delivering more currency. Please learn more here.
According to Leander Dreyer at Jyske Bank the range of 1.31 - 1.32 for EUR-USD is a good level for selling.
"We expect that USD will show relatively strong performance relative to EUR over the rest of 2013. The reasons for this view are in particular the rising US interest rates, rising volatility in the financial market as well as the relatively stronger economic development in the US," says Dreyer.
Richard Driver at Caxton FX says the euro has today come under pressure in the wake of a fresh sovereign debt downgrade of France:
"Rating agency Fitch downgraded France from its AAA credit rating on Friday, pointing to growing debt and a weak economic outlook. Today’s US retail sales figure look set to lend some support to the USD this afternoon, which should weigh on this pair. We expect to see lower levels than the current $1.3050 price this week."
However, Luc Luyet at MIG Bank says his most recent technical analysis of the euro charts shows that EUR-USD is merely consolidating at present:
"EUR/USD is consolidating after its sharp rise. Resistances can be found at 1.3122 and 1.3207 (11/07/2013 high). Hourly supports are at 1.3000 and 1.2928 (61.8% retracement of the recent rise).
"The sharp bounce near the support at 1.2746 (04/04/2013 low) is likely to lead to a phase of sideways moves in the next few weeks.
US dollar faces retail sales ahead
Turning to the US dollar we see a rather busy day ahead.
Boris Schlossberg at BK Asset Management says today's Core Retail Sales in the US will be key for currency market direction:
"The dollar caught a mild bid in mid-morning European dealing especially against the yen as US yields rose and helped to propel the pair to a high of 99.85.
"However, the pair's direction for the rest of the day is likely to be driven by US data with both Retail Sales and Empire Manufacturing on tap at the start of the North American session.
"The market anticipates as rise in Core Retail Sales to 0.5% from 0.3% the month prior, and if the data could match or beat the forecast USD/JPY could make a run at the 100.00 barrier as the day proceeds and currency traders gain more confidence in US growth.
"The news could also drive the EUR/USD below 1.3000 as some of the anti-dollar sentiment from last week's impromptu Ben Bernanke press conference begins to wear off.
"However, if the number miss, the modest dollar rally from overnight is likely to quickly unwind as markets begin to anticipate more dovish testimony from Dr. Bernanke this week."