It should be an exciting opening of the London session today, after the recent euro fortitude took its value vs. the USD close to the range highs at 1.3400. Will buyers make the final push to open blue skies for the euro? Or will the U.S. dollar continue the 11th day pattern of rejecting the edges of the present 140 pips consolidation?
Favoring the case for a euro break higher, it is worth noting that the pair ignored yesterday's upbeat jobless claims in the U.S., lowest level in 5 years, with the impact on the dollar very subdued.
Assessing the U.S. jobs data, Kathy Lien, co-founder at BKAssetManagement, said: "While the data shows that the economy and labor market are improving, the correlation between jobless claims and non-farm payrolls have weakened over the past few years. Therefore investors are not convinced that fewer firings will translate into more hiring."
The phenomenon in which the euro ignores the bad news, after yesterday's horrible unemployment data out of Spain and poor French PMI, and rises on recent good news, has turned the focus onto the upside for the EUR. As Sean Lee, founder at FXWW, notes: "The market needs to buy EUR, rather than wanting to buy EUR, a big difference indeed."
One key driver for the euro today, which may or may not be supportive for a final EUR take-off away from its range, is the German IFO data: "Given the rise in German PMIs and the increase in investor confidence, we look forward to a stronger German IFO report today could help drive the EUR/USD above its range high of 1.34" Kathy adds.
Technically, in view of Valeria Bednarik, chief analyst at FXstreet.com, "there is a short term bullish tone according to technical readings, with a break of 1.3400/10 necessary to see the pair triggering stops and accelerate higher ..."
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.