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26 Apr 2013
Forex: EUR/USD- ECB cut, OMT news, but same old range
FXstreet.com (Barcelona) - Despite the attempts of an adventurous Euro, the climb to more pricey quotes this Thursday was abruptly neglected by breaking news uncovered by the German newspaper Handelsblatt.
The German newspaper referred to a confidential document sent to the German constitutional court, in which the Bundesbank rejects, again, the purchases of government bonds via the outright monetary transaction mechanism, also known as OMT.
While one may think a headline of this kind would be too much to shallow for the Euro, the exchange rate felt almost immune to the next, with the catalyst distorting the slow yet steady progress of the pair being more chatter on an ECB rate cut.
Earlier on the American session, risk assets, including the Euro, were initially buoyed by heightened risk appetite on the back of improved US jobless claims, only to end the US session back to the 1.30 magnet.
Commenting on the OMT news, Sebastien Galy, currency strategist at Societe Generale, notes: "The Bundesbank explained that the ECB is not the lender of last resorts to European governments. More precisely it explains how a country's fixed income market and lending system could start to price in the risk of that country leaving, without it necessarily being linked to a problem of monetary transmission, but linked to particularities of a given country. The issue lies at the political level and not that of the mandate of the ECB."
Fundamentally speaking, the Euro continues with its large collection of negative-related news, yet as frustrating as it may be for potential sellers, the shared-currency still holds tightly around the 1.30 area.
The EU shows a large plethora of concerning news, including mounting skepticism over the bloc's growth prospects, directly connected to the chatter of an ECB rate cut, with the case supported by Germany being the last to show weakening data.
Italy's political mess is not fully resolved yet, although some hope remains after the appointment of Centre-left's Mr. Letta as provisional Italian Prime Minister, Spain is again in the limelight as unemployment broke above the psychological 6 million mark in official figure published today, the Cyprus bailout parody, and the list goes on.
Technically, the EUR/USD needs a resolution outside its current choppy box in order to set the next direction on the pair.
As reported by the FXstreet.com team: "Old 1.3120/40 supply continues to cap the upside as seen on April 19, while no relevant demand area is found until 1.2930/1.29 , as per the April 5th drop-base-rally. Since this latter level has yet to be tested since the rally-base-rally from the last NFP report on April 5, expect unfilled buy orders clustered at this level to provide initial decent bounce. Overall, downside pressure shows greater intensity as per impulsive down moves vs corrective run ups."
In view of UBS, EURUSD shows no intention to move in either direction.
""We still think that the upcoming ECB rate cut and the recession in Europe will drive the euro down. This may happen as soon as the foreign demand for Spanish and Italian bonds ebbs down", UBS said.
The German newspaper referred to a confidential document sent to the German constitutional court, in which the Bundesbank rejects, again, the purchases of government bonds via the outright monetary transaction mechanism, also known as OMT.
While one may think a headline of this kind would be too much to shallow for the Euro, the exchange rate felt almost immune to the next, with the catalyst distorting the slow yet steady progress of the pair being more chatter on an ECB rate cut.
Earlier on the American session, risk assets, including the Euro, were initially buoyed by heightened risk appetite on the back of improved US jobless claims, only to end the US session back to the 1.30 magnet.
Commenting on the OMT news, Sebastien Galy, currency strategist at Societe Generale, notes: "The Bundesbank explained that the ECB is not the lender of last resorts to European governments. More precisely it explains how a country's fixed income market and lending system could start to price in the risk of that country leaving, without it necessarily being linked to a problem of monetary transmission, but linked to particularities of a given country. The issue lies at the political level and not that of the mandate of the ECB."
Fundamentally speaking, the Euro continues with its large collection of negative-related news, yet as frustrating as it may be for potential sellers, the shared-currency still holds tightly around the 1.30 area.
The EU shows a large plethora of concerning news, including mounting skepticism over the bloc's growth prospects, directly connected to the chatter of an ECB rate cut, with the case supported by Germany being the last to show weakening data.
Italy's political mess is not fully resolved yet, although some hope remains after the appointment of Centre-left's Mr. Letta as provisional Italian Prime Minister, Spain is again in the limelight as unemployment broke above the psychological 6 million mark in official figure published today, the Cyprus bailout parody, and the list goes on.
Technically, the EUR/USD needs a resolution outside its current choppy box in order to set the next direction on the pair.
As reported by the FXstreet.com team: "Old 1.3120/40 supply continues to cap the upside as seen on April 19, while no relevant demand area is found until 1.2930/1.29 , as per the April 5th drop-base-rally. Since this latter level has yet to be tested since the rally-base-rally from the last NFP report on April 5, expect unfilled buy orders clustered at this level to provide initial decent bounce. Overall, downside pressure shows greater intensity as per impulsive down moves vs corrective run ups."
In view of UBS, EURUSD shows no intention to move in either direction.
""We still think that the upcoming ECB rate cut and the recession in Europe will drive the euro down. This may happen as soon as the foreign demand for Spanish and Italian bonds ebbs down", UBS said.