After everything, the single currency closed flat on the day at 1.3075 against the dollar. No matter that the EUR/USD has risen to 1.3100 or has declined fast to 1.3070, the pair remained unchanged on Tuesday. So, what's moving the euro?
FXstreet.com analyst Valeria Bednarik commented in a recent report that "everything moves, except the EUR/USD." Meanwhile, BK Asset Management's Managing Director Kathy Lien stated that "investors do not want to see EUR below 1.30."
While the EUR/USD is staying anchored to its range between 1.3000 and 1.3200, "the 1.3040/1.3150 remains well-covered by orders at the extremes, and playing in between is the name of the game," as pointed out by Bednarik. "On a wider outlook, however, the pair needs to break either above 1.3225 or below 1.2970, both Fibonacci levels, on a daily basis to set a clearer tone ahead."
In the medium term, the pair is strongly bullish according to the FXstreet.com trend index in the one-day chart. Indicators such as MACD, CCI, and Momentum are bullish while the Stochastic remains neutral during the same time frame.
As noted in recent reports, 1.3000 is an important support level. However, 1.2970 is the key. "As we can see by the recent price action of the EUR/USD around this key level, investors either don't want to see euro below 1.30 or they are fighting hard to protect orders below that level from being triggered," commented Lien. "For this reason, positive economic reports are having a more significant impact on the euro that weaker data, and therefore this morning's surprise increase in German factory orders sent EUR/USD soaring."
What's Moving the Euro?
"Whatever it takes," the ECB is committed to save the euro, but before that happens the bank must save the eurozone from recession. To do that, the euro must fall. However, the euro remains reluctant to fall despite the fact that the euro leaders are trying to push the single currency lower.
Commerzbank Analyst Karen Jones believes that a fall through the 55-day moving average at 1.3027 is still needed to confirm a trend reversal lower, though. "In this case, the 1.2977/54 support area (the April 24 low and the 200-day moving average) will be in focus," wrote Jones, adding that failure here will concentrate efforts to 1.2839 (a 78.6% retracement of the move up in April, then the 1.2740 recent low).
However, the TD Securities team still looks at the pair as generally rangebound: "Overnight price action was particularly narrow, and with a lack of momentum and a dearth of clear catalysts in the coming days, more range trading should remain the prevailing trend."
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