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How far could the EUR/USD go? Same people who called 1.30, 1.32, 1.33, 1.34 and 1.35 as "big barriers" now say the same thing about the 1.36/38 area. To top it off, Goldman Sachs recently revised its forecast from 1.25 to 1.40 for the coming months, and UBS targeted 1.37 as a 1-month goal.

While volume remains low at this time of the day, "the EUR/USD bullish trend seems here to stay," points out Valeria Bednarik, FXstreet.com chief analyst. In the short term, however, "a downward corrective movement may be seen during the current Asian session, as stocks turned south with earning reports, while the hourly chart shows indicators exhausted to the upside in overbought territory."

Currently, EUR/USD is closing the day 0.55% higher at 1.3560, with the next resistance at 1.3581 (Upper Bollinger) ahead of 1.3615 (high November 18, 2011) and then 1.3641 (high November 15). On the downside, a breach of 1.3500 (high January 29), 1.3480 price zone, past year high and then 1.3392 (MA10d).

At the beginning of the American session, U.S. GDP reported its first decline since the Q2 2009, but the ADP private jobs report posted a +192K increase in January. "With sentiment over the disappointing U.S. GDP release permeating markets on the session, it's no surprise the that the single currency is higher against the U.S. dollar," comments FXstreet.com's analyst Richard Lee. "But, it's not only U.S. economic data that is supportive of euro strength. There's also good news to report out of Europe." Events such as the consumer sentiment surprise in the eurozone and the declining debt costs have fueled the euro.

Later on the day, the FOMC statement highlighted the fact that rates would be at extremely low levels as long as the jobless rate continues to be above 6.5% and the inflation figures below 2.5%. The statement also informed that MBS and Treasury purchases would maintain the previous pace at $85 billion per month. In addition, inflation expectations remain stable, while the housing sector would be gathering traction.

An Unstoppable Euro

The euro rallied to its highest level in 14 months versus the greenback at 1.3577 before losing some steam as investors awaited the Federal Reserve decision. But the Fed was kind of a non-event, and EUR/USD remained at similar levels around 1.3565.

With the EUR/USD now higher above the 1.3550 figure, "it's plausible that the single currency will be able to advance towards near-term resistance at 1.3716," notes Richard Lee. "A break higher through the figure would prompt a likely test of medium-term targets at 1.3890."

Christian Lawrence, analyst at Rabobank, said, "… while we remain of the view that central banks will continue to support risk appetite this year and EUR/USD will retain an upwards bias, we would also warn that there is potential for pullbacks and investors should remain on their toes."

The Day Ahead

Moving forward to Thursday, the euro docket will kick in with a gauge of Retail Sales, the Unemployment Report and inflation reports in Germany, and the eurozone will publish its CPI number for January.

Across the Atlantic, U.S. personal spending, jobless claims and the Chicago Purchasing Managers' Index will take center stage. Investors should also pay attention to the Canadian GDP release.

- German Consumer Price Index (Jan 31 13:00 GMT)
- U.S. Non-Farm Payrolls (Feb 01 13:30 GMT)

Source: Forex: EUR/USD Now Pointing To 1.3600 - Bulls In Command