Outlook remains overwhelmingly in favour of EUR
The euro (Currency:EUR) is the outperformed on Wednesday - however a little shine has been taken off the headline EUR/USD exchange rate after the US dollar reclaimed ground on the back of some good housing data stats.
Housing data gives the US dollar a lift
The US dollar has been boosted by June New Home Sales came in 8.3 pct higher at 497k - the highest level since May 2008. This is above expectations of 482k.
European data drives Euro buying
While the US dollar has received a timely boost from the latest housing stats one can't take the shine off the shared currency.
Max Cohen at Spreadex says:
"European indices have been edging higher on the back of a stream of strong data including both German and French manufacturing PMI.
"In another boost to the Euro zone, private industry unexpectedly bounced back to growth this month. The momentum created by this latest batch of positive data is going a long way to support the notion that the Euro zone is on the right track to recovery."
Potential for the Euro / Dollar exchange rate to grind higher
The current pullback to 1.3226 could prove to be a temporary blip says Shaun Osborne at TD Securities who is backing further gains:
"The EUR has been propped up even further with the help of the better German and French PMI’s. That’s extended EUR/USD’s
grind higher above 1.3200 now and there doesn’t appear to be much ahead of a 1.3300.
"The German IFO survey tomorrow is the next fundamental focus for the pair (which could again support further lift), but next week attention will again shift back to the USD side of the equation with all eyes on the FOMC and US payrolls number."
The RoboForex Technical department agree that the momentum rests with the Euro:
"Euro is extending the current ascending structure; this movement may be considered as a correction. We think, today the price may form a new descending structure to reach the level of 1.2990."
Luc Luyet at MIG Bank is also calling for further short-term strength in the shared currency:
"EUR/USD has moved above the key resistance at 1.3207, opening the way for further short-term strength. An initial resistance is at 1.3254, while a strong resistance lies at 1.3417. An initial support can be found at 1.3164 (23/07/2013 low). Another support lies at 1.3067 (18/07/2013 low). "
Matthew Weller at GFT says traders would do well to buy into any dips in EUR/USD:
"The EUR/USD broke above key previous resistance at 1.3200, stopping out the aggressive sell trade from yesterday’s Candlestick Daily report for a small loss.
"At this point, the bias has shifted to the topside on the EUR/USD, and a recent Bullish Engulfing Candle on the 4hr chart shows that the buyers remain firmly in control of trade. Rates are currently pressing the top of the recent bullish channel, but any dips back toward the lower-1.3200s will be seen as buying opportunities later today.
"As a specific trade, readers could set a limit buy order at 1.3215 (ahead of bullish channel support and previous-resistance-turned-support at 1.32) with a stop at 1.3185 (under these converging support levels) and a target at 1.3260 (near the top of the bullish channel and just ahead of daily Fib resistance at 1.3270."