The euro came under pressure mild pressure on Wednesday and extended its slide against a broad stronger dollar, although it managed to trim losses after the New York opening.
The shared currency weakened on Tuesday and fell below the 1.3300 level in the wake of Eurogroup Juncker comments saying that the euro rate was "dangerously high". In more recent trading, however, more comments from ECB officials and a small upside surprise on eurozone CPI helped the euro to find support near 1.3250.
In the U.S., stocks opened slightly lower amid a big day for earnings reports also weighed by a cut in economic expectations by the World Bank, which now expects the global economy to expand by just 2.4% this year, down from its June projection for global growth of 3% in 2013.
In the macroeconomic domain, a report showed U.S. consumer prices held steady in December, giving the Federal Reserve room to maintain its expansionary policy. Meanwhile, U.S. industrial production grew 0.3% in December, matching economists' forecast.
Euro rises back to 1.3300, is 1.3400 a top?
The EUR/USD fell to a low of 1.3256 at the beginning of the New York session, but it managed to trim losses underpinned by the improvement in risk sentiment as US stocks move off session lows. The pair was last trading at the 1.3300 area, virtually unchanged on the day.
At this point, EUR/USD would need to regain the 1.3320 area (intraday highs) to turned focus back to the upside, with 1.3400 as next target ahead of the 1.3485 big figure (2012 high). On the other hand, loss of the 1.3250 area would increase the short-term pressure, targeting then the 1.3200 mark. Longer term view however, remains positive although daily indicators begin to lose momentum.
Sharing its technical expertise, the TD Securities analyst team notes that the price action has turned positive (outside range reversal on the 6-hr chart) suggesting we could see a more constructive North American session. "That fits with the bigger technical picture which still indicates a move to 1.36 at least, is achievable in the coming weeks".
"With the corrective price action of the past couple of days we have turned more neutral on the FX outlook, though we maintain a slight overall upward bias for most foreign currency over the near-term", says Nick Bennenbroek, Head of Currency Strategy at Wells Fargo Bank.
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