What is the Euro Up To ?

By FXEmpire.com

On Tuesday market sentiment on the global level improved. The reasons behind the swing were not that evident. The day started off in the first place as ‘natural’ rebound after the recent correction as several markets were close to key technical levels. The euro dollar tried to move a bit further away from the 1.2974/1.3000 support area. However, at the end of the day, the gains of the single currency were close to non-existent.

On the financial hotlines, the rebound on the equity markets and also of euro dollar were linked to a better than expected ZEW indicator in Germany and a successful T-bill auction in Spain. At least for the performance of euro this interpretation is questionable as shared currency had reached already its intraday high before the publication of the ZEW. From the there, the pair settled in a sideways consolidation pattern in the lower half of the 1.31. It was amazing how many news and financial sources claimed that the ZEW moved the markets when the euro had already reached the trading level before the release.

The US housing data were mixed. Although U.S. builders start work on new homes at a sharply slower March pace, construction permits jump to their highest level in 3 1/2 years, data showed. Builders began construction on new U.S. homes at a slower pace in March, but permits jumped to the highest level since September 2008, the Commerce Department reported Tuesday. Housing starts fell 5.8% last month to an annual rate of 654,000.The industrial production was slightly disappointing, but they were no big issue for euro trading. The IMF raised its outlook for the world economy (slightly). This might have been a supportive factor for risky assets.

The rally on the US equity markets continued later in the session, but it didn’t help EUR/USD to any further gains. The euro closed the session at 1.3127, compared to 1.3142 on Monday evening. After all yesterday’s price action didn’t change the global picture for EUR/USD trading. On the contrary, the EUR/USD performance was far from inspiring and suggests that the pair is still vulnerable to renewed downside pressure if the news flow would turn again less positive.

Asian equity markets joined yesterday’s rebound in the US and in Europe. However, this has no impact on euro dollar The pair is changing hands in the low 1.31 area at the moment of writing.

It is doubtful that this will already happen today as there are no key events on the agenda. Tomorrow’s Spanish bond auction is the next milestone for (European) markets. We maintain our EUR/USD negative trading bias and still look to sell into strength. A break below 1.2974 would open the way to the 1.2623 year low.

Originally posted here