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Euro predicted to advance, US data points could however scupper forecasted gains

In early afternoon trade on Thursday we see the Euro to be taking advantage of broad-based US dollar weakness.

Euro Dollar exchange rate trapped in a "top heavy range"

euro dollar chartTurning to the outlook for the Euro Dollar exchange rate Emmanuel Ng at OCBC says:

"Our view remains essentially unchanged and in the near  term, the EUR-USD may remain trapped in a top heavy range with  yesterday’s EZ GDP numbers failing to impart any positive spin to the  common unit. If the 1.3200 support is threatened successfully, the hitherto  supported tone for the pair may be defused significantly." (Click thumbnail on left to enlarge).

Predicting a continuation of the push higher

  

Craig Erlam at Alpari UK says he is predicting further gains in EUR/USD:

The euro has started strongly on Thursday after taking a bit of a beating over the last four trading days. The pair hit 1.3310 earlier in the session, which may have marked the end of the retracement, but I feel there’s still a little bit left in this retracement, before the pair targets 1.32.

"The 50 and 61.8 fib levels of the recent move from last Thursday’s highs to Tuesday’s lows could potentially mark the top for this retracement, around 1.3317 and 1.3336, respectively.

"Both are also previous levels of support and resistance as well. The 30-minute chart supports the short term continuation of the push higher, with the pair having temporarily consolidated, creating a flag formation, before popping higher.

Support must break to dampen expectations

Luc Luyet at MIG Bank casts his eyes to the key support levels ahead:

"EUR/USD is deemed to be in the midst of a corrective phase off the recent 1.3400 high. A sustained break back under 1.3190 (02/08/2013 low) is required to dampen our expectations of an eventual return to the August high and then onto 1.3417 (19/06/2013 high).

"If a retest, or break over, 1.3417 can be achieved, the region between this key high and the annual high is expected to see a fair degree of resistance and is likely to offer a reasonable short entry opportunity."
best euro dollar rates

US data lies ahead

The trajectory of the currency markets could well change within the coming hours as the US economy sheds some data.

The key numbers to look out for are:

  • CPI (YoY) forecasts are for 2 pct, MoM figures are forecast at 0.2 pct.
  • Consumer Price Index (CPI) Ex Food & Energy forecasts are for 1.7 pct.
  • Initial Jobless Claims consensus forecasts are for a number at 335K.
  • Industrial Production growth is forecast at 0.3 pct.
  • Philadelphia Fed Survey forecasts are for a reading of 15.
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