EUR Defending 1.34: How Large are the Stops at This Level?

A look at the currency markets on Thursday morning shows the Euro is under pressure:

• EURUSD is 0.67 pct lower on a day-to-day basis at 1.3264.
• EURGBP is 0.54 pct lower at 0.8545.
• EURAUD is 0.66 pct down at 1.4825.

It is important to note that the above are wholesale spot market quotes. Your bank will subtract a discretionary spread when passing on their retail rate. However, an independent FX provider will guarantee to undercut your bank's offer, thus delivering you more currency. Please learn more here, or use our live rate vs retail rate converter.

What will it take to smash through 1.34?

We are seeing an extension of in the recent pullback for the Euro Dollar exchange rate after 1.34 is once again rejected.

Kathy Lien at BK Asset Management ponders on the extents to which investors will defend this level. Lien says:

"For the second time this week, the EUR/USD rejected the 1.3400 level and at this stage, we can't help but wonder how large the stops are at 1.34 and how far investors will go to defend it.  In order for the EUR/USD to extend its gains and take out 1.34 in the process, good news needs to keep rolling in.  The recent rally was stalled by weaker consumer confidence in Germany.  

"While economic data has been improving, upcoming elections and the recent increases in food prices are making consumers nervous about their future financial situation."

German Unemployment Data Disappoints

Today's sell-off in the Euro is largely as a result of poor employment data out of Germany.

The Unemployment Rate released by the Bundesagentur für Arbeit and published by the German Statistics Office shows that unemployment came in at 6.8 pct - unchanged and in line with analyst forecasts.

However, the Unemployment Change reading - a measure of the change in the number of unemployed people in Germany - came in at +7k, well above expectations for -5k.

Short-term technical forecasts

Turning to the charts, first up we hear from Ipek Ozkardeskaya at Swissquote:

"EURUSD remained capped at 1.3342 (Fibonacci 38.2% level on February-March drop) in Asia, cleared 1.3300 support and rallied down to 1.3285 in the European opening.

"The pair crossed its 21-dayMA (1.3325) on the downside; intra-day momentum turned negative. Offers from Asian sovereign names are still solid at 1.3400/20."

Geoffrey Yu at UBS remains bullish on the Euro Dollar rate:

"Initial resistance is at 1.3452, a break above which would open 1.3520 ahead of 1.3711. Support is at 1.3298 ahead of 1.3206."

UniCredit Bank tell their clients:

"EUR-USD is again struggling in the 1.33/1.34 band. Another batch of firm economic data across the eurozone today could offer support. We still favor some tactical EUR-USD buying close to the lower bound of the indicated band, but we doubt that strong bids will emerge for now."