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As EUR/USD sets another record low for year 2012 in volatility terms, reading the ATR 14 indicator in a daily chart as it reaches as low as 78 pips on average for daily range in the last 14 days, the pair is just where it was more than 32 hours ago in the very early Asia-Pacific trade yesterday-- that is, last at 1.3170.

On top of this, the 1.32 in EUR/USD round level seems frightening to break above, given almost everything derivative expires this coming weekend, and failure to do so would point to a retrace back to 1.31 round levels, says FXstreet.com Independent Analyst Richard Lee: "EURUSD upside is being hampered by the psychological 1.3200 round figure. Given the short term consolidation on the session, probabilities are high for a turn in the five day win streak. Look for 1.3100 to be the first tested on the way down," the analyst suggests.

Little change in all USD across the board, with the USD index showing a small decline of -0.06% for the day, despite improvement in risk aversion as U.S. 'fiscal cliff' negotiations keep getting closer to a final agreement: "Republican leaders led by House Speaker John Boehner have conceded to allowing a tax rate increase of earners making a minimum of $1 million. The tax rate for income in that range would increase from 36% to 39.5% under the concession," notes Richard Lee.

Risk appetite in the equity markets looks more promising, especially in Asia. The Nikkei index is printing yet another higher high, last around the 9960 points figure near fresh 8 ½ month highs, +1.34% for the day, and breaking above descending trend line from early April 2010 highs. Australian ASX index prints fresh 2012 highs, all following the +1.19% SP500 Monday's advance.

Commodity markets also have been improving since yesterday with iron ore rising a +2.2% overnight and sitting at a +2% gain year to date following a +50% recovery in last few weeks, along with copper higher by +7% year to date, Gold at weekly highs, and oil at fresh 2-week high-- last at $87.81 for light crude.

"Short term, although technical readings remain flat in neutral territory, the upside is favored as long as price holds above the 1.3125 area," says Valeria Bednarik, Chief Analyst at Fxstreet.com, "with scope to test 1.3250/80 if 1.3190 is taken," the analyst suggests, adding: "Below 1.3125 on the contrary, bearish correction may try to reach 1.3070 static support level," she concludes.

Source: Nobody Willing To Be The Catcher In The 'Fiscal Cliff'; EUR/USD Flat As A Pancake