EUR/USD: In Need Of Fresh Catalysts To Kill The Boredom

Includes: ERO, EU, FXE, UDN, UUP
by: FXstreet

EUR/USD is currently back to exactly where it opened yesterday (Wednesday) in Asia-Pacific at 1.2961, despite the fact it shot up higher to fresh weekly high at 1.3019 in late London session yesterday, just to be sold back aggressively once Wall Street opened again, following two consecutive days of closure due to Hurricane Sandy.

Today's (Thursday) upbeat revision on the final China HSBC PMI improved the propensity to seek risky assets in Asia, but not enough to take EUR/USD higher than 1.2970. Asian stock markets showed more pessimism than otherwise, with the Korean Kospi losing more than -1.2% and the Hang-Seng up by +0.5%. Australia's ASX went through a bloodbath, losing around -1.3%.

Very quiet London session ahead in terms of EUR data related, with French and Italian markets closed for a bank holiday, and not even EU sovereign debt auctions are to take place. Both Spanish and Italian 10 year bond yields remain in quiet waters at 5.68% and 4.96% respectively. Greece will publish manufacturing PMI at 08.58 GMT for the matter, with the country still not finding a positive resolution to receive the next tranche of aid worth over 31.5 billion euros. Latest reports suggest Greek public debt is set to increase 189% of GDP next year, way off track from a 179% estimates. GDP points to contract another 4.5% in 2013.

EUR/USD, another day of range a done deal

As it has been argued repeatedly, EUR/USD is expected to go nowhere fast for the time being, as the market still awaits fresh catalysts. Now that October is behind us, it has been confirmed (according to IFR Markets data) that month-by-month EUR/USD volume stood at the lowest levels in almost 5 years. The next risk events to potentially shake out the pair are scheduled on Friday, when the U.S. will publish the non-farm payrolls, and next Tuesday, U.S. presidential election day.

Immediate support to the downside for EUR/USD lies at the October 23 low of 1.2950, followed by the October 24 low at 1.2920, and the October 26/29/30 lows at 1.2885. To the upside, nearest term resistance comes at recent session highs 1.2970, followed by Tuesday's high of 1.2983, and yesterday's October 25 highs at 1.3020.

In view of Tim Riddell, Head of FX Research at ANZ, EUR/USD trades

within the context of broader corrections off July's 1.2060 low, and should now retrace into the 1.2475 (61.8%) - 1.2740 (38.2%) area (50% at 1.2605-10) over the coming couple of weeks before forming a base and allowing for a secondary, but corrective, rebound towards 1.3150-1.3500 into 2013.

Looking at the most recent price action, FX Founder Sean Lee, finds the market as lacking momentum and confidence: "Everyone seems to be trading with tight trailing stops, which again led to a sharp reversal to where we started yesterday." Meanwhile, in-house Technical Expert, Valeria Bednarik, comments: "Ranges are the name of the game, and while the employment report may bring some action on Friday, uncertainty still rules and breaks before the event are unlikely."

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.