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Home » Technical Analysis » Daily » EURUSD » EURUSD Rally Short-Lived as Push to Parity Continues

EURUSD Rally Short-Lived as Push to Parity Continues

Posted by FXTimes in EURUSD - March 13th, 2015 3:11 pm GMT

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Technical Bias: Bearish

Highlights: 

  • EURUSD declines 110 pips to 1.0510, reversing Thursday’s rally.
  • Concerns about ECB bond buying, Greek debt crisis outweigh weaker than forecast US data.
  • Greek PM Tsipras meets with EU president Juncker on Friday.

The EURUSD was back on its heels Friday, tumbling to a low of 1.0504 on renewed concerns about the Eurozone economy and the Greek debt crisis.

The EURUSD was trading at 1.0510 in the early North American session, declining around 110 pips. The pair’s next support target is 1.0414. On the upside, the first resistance test is located at 1.0715.

 

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The euro rebounded from 12-year lows on Thursday, as the EURUSD climbed to a high of 1.0675 following disappointing US retail sales. Those gains were completely reversed on Friday, as the EURUSD paces for a weekly loss of 3 percent.

In economic data, US consumer sentiment declined unexpectedly in March, reflecting renewed concerns about tepid wage growth and rebounding gas prices. The Thomson Reuters/University of Michigan consumer sentiment index declined 4.2 points to 91.2, a four-month low.

Separately, the US producer price index – a gauge of inflation in primary markets – declined at an annual rate of 0.6 percent in February. That was the fourth consecutive decline, reflecting tame inflationary pressures across the US economy.

Concerns about the Eurozone outweighed weak US data on Friday, as the European Central Bank embarked on a €60 billion a month asset purchasing program. The program, which was announced in January and set into motion this past Monday, will inject up to €1 trillion into the Eurozone in the next year-and-a-half in an effort to prop up the struggling economy. While the ECB appears confident QE would boost economic growth and inflation, some officials have expressed concerns that excessive stimulus could send stronger member-states such as Germany into overdrive. Such a scenario could widen the gap between rich and poor and complicate already fragile negotiations between Greece and its Eurozone partners.

Greek Prime Minister Alexis Tsipras met with European Commission president Jean-Claude Juncker on Friday, who called on European governments to show solidarity with Greece amid ongoing debt negotiations. The meetings came just one day after German finance minister Wolfgang Schauble said the lack of progress was increasing the likelihood of an accidental Greek exit from the currency region.

“As the responsibility, the possibility to decide what happens only lies with Greece, and because we don’t exactly know what those in charge in Greece are doing, we can’t rule out,” Schauble told an Austrian broadcaster on Thursday.

Juncker was more optimistic on Friday. “I don’t think we have made sufficient progress,” he told reporters, adding “I’m totally excluding a failure… This is not a time for division. This is a time for coming together.”

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