Forex Outlook: Euro Rebounds from Two-Month Low
According to Reuters the euro hovered near a two-month low on Wednesday, hurt by uncertainty over Greece’s fate and weak German business sentiment that highlighted the growing pain in stronger European economies from the Eurozone’s protracted debt crisis.
The EUR rose 0.2 percent to $1.2722, but still in close proximity to its two-month low level of $1.2661 set on Tuesday, when the currency plunged on a weak German ZEW sentiment survey.
Support for the euro stands at its 90-day moving average near $1.2667 and additional support level at $1.2653, the bottom of the daily cloud on the Ichimoku chart. A break below the Ichimoku support can be considered as a strongly bearish trend that could lead to a test of the $1.2608 mark. An agreement on Greece’s aid package and a swift delivery to Athens are expected to rally the euro.
“For the moment, the market’s focus is on whether they can decide on a deal for Greece next week,” said Teppei Ino, currency analyst at the Bank of Tokyo-Mitsubishi UFJ, for Reuters.
On the upside Fxstreet.com expects immediate resistance at recent session/yesterday’s highs at 1.2730, followed by Monday’s and weekly highs 10 pips above, and 6 November lows at 1.2762.
Bild Zeitung, a German newspaper, reported that Greece would get a lump sum of over €44 billion (£35.24 billion) in aid under a German proposal to rebundle the remaining instalments this year, citing unnamed sources in the German government. The unconfirmed news has beaten the bears off the market, signalling further upside in the EUR/USD pair.
The most important piece of information today will come from the release of the US Federal Open Market Committee (FOMC) minutes. Fxstreet.com points out that the effect of this release is very difficult to assess, and could easily reverse the slowly forming EUR bullish sentiment into a USD bullish sentiment.
Nothing very exciting is marked today on Europe’s economic calendar. French CPI should be published at 07.45 GMT, followed by EU industrial production, Portugal and Greece GDPs at 10:00 GMT, and Portugal unemployment at 11.00. Jobs data for the UK expected to be released at 09:30 GMT and the Inflation report one hour later could bring some volatility to EUR/GBP cross.
Reuters warned of massive anti-austerity strikes all day long in Spain and Portugal, while Greece and Italy are planning work stoppages and demonstrations. The Iberian Peninsula is set to witness historical international coordination in what is seen as a pan-EU protest against austerity.
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