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6 Jun 2013
EUR/USD still in holding pattern below 1.3100
The EUR/USD closed the session slightly higher, up 11 pips at 1.3092 but still not finding enough follow through to take out resistance near the 1.3100 level
According to David Song, Currency Analysts at DailyFX, “indeed, the European Central Bank interest rate decision highlights the biggest event risk for the next 24-hours of trading, and the fresh batch of central bank rhetoric may dampen the appeal of the single currency should the Governing Council carry its easing cycle into the following year.”
Song went on to add, “although the ECB is widely expected to keep the benchmark interest rate at 0.50%, we may see a growing discussion for a negative interest-rate policy (NIRP) amid the persistent slack in the real economy, while President Mario Draghi may show a greater willingness to purchase Asset-Backed Securities (ABS) in order to encourage private sector lending. In turn, the head-and-shoulders pattern in the EURUSD may continue to take shape during June, and we will maintain a bearish outlook for the Euro as the region struggles to emerge from the recession.”
The FXStreet.com Trend Index remains in slightly bullish set up on the daily chart, while the ob/os index reads overbought. Short term moving averages also remain in slightly bullish set up, with price above both the 9 and 20 dma’s. The RSI (14) is approaching key resistance at 60 which is the upper end of the bearish range zone. This should be monitored closely in coming days as a move through 60 could propel additional momentum buying.
According to David Song, Currency Analysts at DailyFX, “indeed, the European Central Bank interest rate decision highlights the biggest event risk for the next 24-hours of trading, and the fresh batch of central bank rhetoric may dampen the appeal of the single currency should the Governing Council carry its easing cycle into the following year.”
Song went on to add, “although the ECB is widely expected to keep the benchmark interest rate at 0.50%, we may see a growing discussion for a negative interest-rate policy (NIRP) amid the persistent slack in the real economy, while President Mario Draghi may show a greater willingness to purchase Asset-Backed Securities (ABS) in order to encourage private sector lending. In turn, the head-and-shoulders pattern in the EURUSD may continue to take shape during June, and we will maintain a bearish outlook for the Euro as the region struggles to emerge from the recession.”
The FXStreet.com Trend Index remains in slightly bullish set up on the daily chart, while the ob/os index reads overbought. Short term moving averages also remain in slightly bullish set up, with price above both the 9 and 20 dma’s. The RSI (14) is approaching key resistance at 60 which is the upper end of the bearish range zone. This should be monitored closely in coming days as a move through 60 could propel additional momentum buying.