Special winds of recovery in the Eurozone have fueled the Euro in the last days, but its indecision is latent as investors are waiting for Washington developments on debt ceiling and next week big events. Despite all the noise of these days, the EUR/USD closed a 5-pip negative Doji candle in the week.
The biggest topic this week was the lack of agreement in debt ceiling. It seems lawmakers will wait until the 11th hour in Monday, but the problem is that it matches with the end of the month and quarter. Many investors, traders and portfolio managers are worrying on it as the Dow and the S&P 500 closed its sixth negative session of the last seven.
The uncertainty is the topic in the currency markets too, as investors prefer more hints in the Washington battle and, despite recent good economic data, about the possibility of further easing by the ECB. "In his recent speeches, Draghi has been teasing the markets with hints of further easing," comments the BabyPips.com FX-Men Team. "This is a bit surprising, considering the euro zone has recently shown notable improvements in consumer confidence and overall economic activity."
Answering this topic, BabyPips affirms that "the central bank is probably just trying to maximize their current easing programs by keeping a lid on longer-term rates." In this line, FXstreet.com's analyst Katarzyna Komorowska shares in her ECB and BoE previous that her sources "expect the European Central Bank to maintain monetary policy unchanged at the next meeting.”
In this framework, the EUR/USD's buying interest is losing momentum according to the Forecast Poll as experts expect more gains the next week. However, market players expect Euro to Dollar exchange rate to lose ground in the long term.
In the short term, FXstreet.com Chief Analyst comments that "the bearish case looks worse ahead of a new month start: next week, the ECB economic policy meeting and the US employment data, will surely provide more reasons to buy the pair than to sell it." As for technical levels, "failure to overcome 1.3570 and steady losses below mentioned 1.3460 should put the pair in downside corrective mode, eyeing then 1.3280 area, where the pair will finally fill the weekly opening gap from September 15th," concludes Bednarik.
The GBP/USD advanced on Friday and it closed above the 1.6100 area for first time since the Fed's non-taper day. It was the fourth week of gains in a row as the GBP/USD has won around 700 pips in a month and 1300 pips since July 6 when the pair posted its double bottom.
The USD/JPY lost all its Thursday’s gains on Friday as the pair declined from 99.00 to close at 98.25. The AUD/USD tested the 0.9300 area today after extending declines from September 19th highs at 0.9520.
Main headlines in the American session
August US Personal spending 0.3% vs 0.3% exp m/m
US: PCE rose 1.2% YoY in August
US: Reuters/Michigan Consumer Sentiment Index slides to 77.5 in September
Austria keeps the AAA rating, outlook stable
Dudley: Time between end of QE and first rate hike ‘could easily be a number of years’
CFTC Commitments of Traders: Traders dump bets on the dollar after the Fed
Wall Street declines on Friday and closes its first negative week in four
(Fxstreet)
