Forex: EUR/USD Trades Quiet After Respecting The 1.3000 Support

 |  Includes: ERO, EU, FXE, UDN, UUP
by: FXstreet

The euro has been rising above the 1.3100 frontier against the U.S. dollar on Monday following a quiet day and ahead of the Q4 earnings season. The EUR/USD is consolidating intraday gains and keeping the positive tone with 0.30% daily gains.

"Bouncing off of support via the 1.3033 figure, EUR/USD has gained traction and is now testing 1.3100 round figure resistance," comments analyst Richard Lee. "A break above the figure would open scope for an advance on the 1.3164 barrier, en route to a 1.3200 psychological barrier test."

On the other hand, the FXMarketAlerts Team expects the EUR/USD to rise to 1.3126 as next and then a fresh downturn. "The EUR/USD retains its bounce action for the moment as it seeks out the next main resistance at 1.3126." The pair could test the 1.3126 quickly "and then start looking for the next downturn to take shape at 1.3126. From there, the downside potential is back to the 1.3014/00 zone in due time."

The days to come

Moving forward to Tuesday, the euro docket will kick in with the German and Italian trade balance figures, ahead of a measure of the Consumer Confidence in the euro area along with Industrial/Services Sentiment and Retail Sales. The EMU unemployment rate and the relevant Factory Orders in Germany will close the calendar.

Regarding the German Factory Orders, the report is expected to decline yet again just ahead of the European Central Bank announcement this week. Richard Lee points that with a below 1.4% figure, "would remain widely bearish as it signals a worse than expected contraction in the region's largest economy," with "some selling pressure to ensue on the EUR/USD" in the short term.

As for the wider picture, Scotiabank expects the maintaining the 1.26-1.33 range. In the opinion of Camilla Sutton, Chief Currency Strategist at Scotiabank,

This week's focus will be on Thursday's ECB meeting, where the central bank is expected to leave interest rates on hold, but President Draghi's press conference is likely to be relatively dovish and focus on the potential launch of the OMT as well as the likelihood of negative rates. We expect EUR to trade contained within a relatively broad range of 1.26 to 1.33, but to struggle to break out.

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.