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6 May 2015
EUR/USD losses might remain capped at 1.1190 – FXStreet
FXStreet (Barcelona) - FXStreet Editor and Analyst, Omkar Godbole, views that the losses for EUR/USD might remain capped at 1.1190, but the upside rally might derail if today’s Eurozone services PMI prints a weak number.
Key Quotes
“The EUR/USD pair recovered from the low of 1.1065 to print an intraday high of 1.1220 on Tuesday. The shared currency continued to rise as the bond yields across the Eurozone rose sharply.”
“German 10-year Bund yield rose 6bp, French 10-year yield rose 9bp. Meanwhile, the 10-year Treasury yield in the US rose only 2bps. Consequently, the EUR rose on a favorable German-US yield spread. However, there are indications that the rally could derail. The EUR is negatively correlated with the rally in the Greek and other periphery bond yields. The Spanish and Italian bond yields rose 25 bp on Tuesday, while Greek yields rose more than 40 bps.”
“The latest development surrounding Greece is the major disagreement between the IMF and EU over the conditions Greece needs to meet to receive its next bailout payment. It is highly unlikely that we see a breakthrough deal at the May 11 Eurogroup meeting. Thus, a rally in Greek yields could weigh on Euro. Meanwhile, a weaker-than-expected services PMI numbers could also weigh over the single currency.”
“At the moment, the pair is trading at 1.1232, after having bounced-off from 1.1173 in the early Asian session. The pair has repeatedly run into fresh offers in the range of 1.1250-1.13 in the past few sessions. With the intraday RSI hit overbought region, fresh offers could be seen around the current level as well. In such a case, the immediate losses appear restricted around 1.1190 (5-DMA). A break below the same could invite more selling pressure, taking the pair down to 1.1110 levels.”
“On the other hand, a break above 1.1288 could drive the pair higher to 1.1350 levels.”
Key Quotes
“The EUR/USD pair recovered from the low of 1.1065 to print an intraday high of 1.1220 on Tuesday. The shared currency continued to rise as the bond yields across the Eurozone rose sharply.”
“German 10-year Bund yield rose 6bp, French 10-year yield rose 9bp. Meanwhile, the 10-year Treasury yield in the US rose only 2bps. Consequently, the EUR rose on a favorable German-US yield spread. However, there are indications that the rally could derail. The EUR is negatively correlated with the rally in the Greek and other periphery bond yields. The Spanish and Italian bond yields rose 25 bp on Tuesday, while Greek yields rose more than 40 bps.”
“The latest development surrounding Greece is the major disagreement between the IMF and EU over the conditions Greece needs to meet to receive its next bailout payment. It is highly unlikely that we see a breakthrough deal at the May 11 Eurogroup meeting. Thus, a rally in Greek yields could weigh on Euro. Meanwhile, a weaker-than-expected services PMI numbers could also weigh over the single currency.”
“At the moment, the pair is trading at 1.1232, after having bounced-off from 1.1173 in the early Asian session. The pair has repeatedly run into fresh offers in the range of 1.1250-1.13 in the past few sessions. With the intraday RSI hit overbought region, fresh offers could be seen around the current level as well. In such a case, the immediate losses appear restricted around 1.1190 (5-DMA). A break below the same could invite more selling pressure, taking the pair down to 1.1110 levels.”
“On the other hand, a break above 1.1288 could drive the pair higher to 1.1350 levels.”