The euro held the 1.3000 level in the American session, with the unique currency gaining on its U.S. counterpart Monday after local Spanish elections enabled Prime Minister Mariano Rajoy's party to maintain power in the region of Galicia. EUR/USD ended the North American session at 1.3060.
But where are the easy pips? Valeria Bednarik, FXstreet.com's Chief analyst answers: "surely, not in this range bound market." The EUR/USD traded in a tight 70 pips range this Monday between 1.3010 and 1.3080, consolidating above the MA 200 hours line.
The EUR/USD bottomed last Friday at the 38.2% retracement of its latest bullish run from 1.2824 to 1.3138, past-week high. "Intraday trading remains choppy, with prices jumping either side of the board based on headlines coming mostly from Europe," adds Bednarik. However, market players are not sure what do next, and a catalyst may come later this week with the Fed, or an event next week with Central Banks and U.S. payrolls. Meanwhile, consolidation is the name of the game.
The Wells Fargo bank believes that the Forex market could remain rangebound this week:
The euro is higher, reversing some of last Friday's decline after a strong showing by the Spanish PM Rajoy's party in the regional elections over the weekend.
The global economic calendar is busy for the week ahead, including the U.S. and UK Q3 GDP reports and monetary policy announcements in the U.S., Japan, Canada, New Zealand and Mexico. With the exception of the Bank of Japan, no major policy changes are expected from the central banks, which could keep the FX markets range bound over the coming days.
In the "FXstreet.com's currencies forecast poll," Experts, Banks and Independents expect a bit more confidence in the EUR/USD for the current week. Experts and banks agree the EUR/USD may rise in the short term. Year-end however, will see the EUR fall.
In the same line, the BBH analyst team comments that "speculative positioning at the IMM still shows a large number of short euro positions remain, and whose short-covering could fuel another leg up in the euro." However, BBH thinks "the euro has yet to prove itself." As the EUR/USD has been trading in its 1.2830/1.3060 one-month range ($1.2800-$1.3200 range, says BBH) with a recent testing of the upper side, "the rule of alternation suggests some operators will anticipate a move toward the lower end of the range," according to BBH.
As for the short term, "the hourly chart holds to a limited upside momentum, although the pair continues finding some selling interest in the 1.3070 area," comments Bednarik.
In the four hours chart, indecision is quite strong, "with the latest five candles showing little body and long shadows either side of the board," says Bednarik. "Steady gains above 1.3080, or a break below 1.3010 is what it takes to shake the pair a bit, at least in the short term."
Wall Street Squeaks Out Gains
On the intermarket analysis, U.S. stocks initially fell on Monday as investors continued to digest negative corporate earnings reports released late last week, but managed to recover from their lows in the final hour of trading to finish higher on the day. Dow Industrials added 2.38 points to end at 13,345.89, with 12 of its 30 components closing in positive territory. The S&P 500 gained less than a point to close at 1,433.81, and the Nasdaq Composite rose 11.33 points to end at 3,016.96.
Oil futures settled below $89 a barrel as investors monitor developments in the Middle East, as well as the expected start of a North American pipeline. U.S. Treasury prices ended lower on Monday after gaining on Friday as traders sit on the sidelines ahead of the Federal Reserve meeting and key U.S. GDP growth data on Wednesday.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.