Euro Looking To Define A Direction

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Includes: FXE, UDN, UUP
by: FXstreet

Although the sentiment surrounding the bloc currency woke up in a better mood, the lack of a clear prolonged trend predominated amongst euro traders, whilst the FOMC minutes emerge as the paramount event of the day. The euro is acting in absolute isolation from the rising social unrest, materialized today in general strikes in Spain, Portugal and Greece. What is even more astonishing, EUR/USD is printing fresh highs in the boundaries of 1.2760

The dust of yesterday's rumors about Germany favoring one payment to Greece worth €44.0 billion, comprising three payments into one, has not settled yet, helping in today's upside.
In the meantime, debt markets in Spain and Italy are not echoing the difficult path the real economy in the euro bloc is facing, putting aside their function of general barometer to concentrate only in showing absolute figures of bond yields.

… Has the trend reversed?

While selling pressure was suffocating the euro in past sessions, the single currency has managed well enough not only to leave those pressures behind but also to emerge triumphant and head towards new highs.

Karen Jones, expert at the German lender Commerzbank, expects rallies in the cross to be tagged as corrective against a backdrop of a wider bearish outlook. "We are more cautious today as we note the TD perfection setup on the daily chart and the divergence of the 240 minute RSI and we would allow for a near term rebound ahead of further losses", the analyst commented, adding that the downtrend would target the area around 1.2480

The Bullish Percentage Index, developed by the research team at FXstreet.com, has climbed from recent lows albeit still navigating below the 50% threshold, actually showing that 42.11% of euro-based pairs are still in bullish mode on a point and figure pattern.

… What Thursday brings to the table

A more than interesting docket for the eurozone awaits tomorrow: preliminary GDP figures for the third quarter in France, Germany and Italy will be released ahead of the relevant ECB Monthly Report. Inflation figures and flash Q3 GDP in the bloc composite will follow, ahead of the U.S. CPI, the weekly report on the labor market, Empire State and Philly Fed manufacturing indexes and speeches by Fed's members Lacker, Fisher and Dudley.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.