EUR to Advance Gains versus US Dollar, However Losses versus Pound Likely
Commenting on the Euro's battle with the Pound, Richard Driver at Caxton FX says:
"Sterling is well away from its early-August lows and in light of the outstanding set of UK PMIs for July and the Inflation Report, is in decent shape to push higher from here. Next week’s UK unemployment update (Wednesday) takes on a special significance in light of Mark Carney’s 7.0% unemployment threshold with respect to the first BoE interest rate hike. A decent showing on Wednesday could give sterling another boost.
"A shortage of major news today could result in further sideways trading around €1.16 for the time being but there is no doubt that the outlook has brightened for this pair this week."
Euro Perdicted to Continue Advancing Against US dollar
The outlook for the Euro Dollar exchange rate continues to favour the EUR.
Driver says:
"A noted member of the US Federal Reserve has stated that the central bank should be in a position to taper QE3 in September, provided US data continues on an uptrend. Interestingly, he stated that all of his policymaking colleagues are singing from the same song book, which is good news for the greenback in the longer-term.
"The dollar has maintained a weakening bias this week thanks to last Friday’s disappointing Non-Farm Payroll figure and more of the same is likely as we head into the weekend."
"A rough week for the greenback has made it pretty easy going for the euro this week but we have a busy schedule next week in terms of US economic announcements. This could result in some profit taking on EUR/USD’s recent gains. As it is, these are the strongest levels seen since February for this pair.
"$1.34 could well keep a lid on EUR/USD today and a genuine reversal of its recent rally could be around the corner."
Technical Forecasts for the Euro Dollar Rate
RoboForex are backing the Euro, they tell clients:
"Euro continues moving upwards. We think, today the price may reach the target at 1.3400, form a correction towards the level of 1.3200, and then continue growing up to reach the target at 1.3650. This ascending structure may be considered as the fifth wave; its internal structure may help us to define the exact point where it will be completed."
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Craig Erlam at Alpari UK says today's price action will be important in determining next week's direction in the Euro:
"It’s been another good week for the euro, despite signs earlier in the week that we could see a reversal of the recent uptrend. The pair bounced nicely off the descending trend line last week before closing close to where it opened and forming a doji candlestick.
"This is typically very bearish, but not on this occasion. The pair has continued to rally this week and has now broken through the descending trend line, before running into a brick wall at 1.34.
"Clearly the combination of the previous resistance level and the 200-week SMA proved to big an ask for the pair, with traders choosing this as the point at which they either lock in profits or go short.
"What happens today should now give a strong indication for next weeks price action, with a close below the trend line suggesting that there aren’t enough bulls to take it to the next level.
"As I mentioned previously, the pair has a tendency to trade in a range between certain levels, with the current one being 1.32 – 1.34.
"A break above here would be very significant, especially if it coincided with a close above the trend line. We should then see a move back towards this year’s highs of 1.3710."