European Events and Economic Data
Wednesday (27th), in early European market, the dollar index down slightly, trading at 81.72. Overnight, Bernanke's remarks in Congress: quantitative easing as a whole does more good than harm, the dollar slightly under pressure. The political stalemate caused by the recent Italian election results, the market fears sustains. Currently, Euro / dollar rebounded to intraday high 1.3092. The market generally worries about the later Italy’s bond auction.
Tuesday (26th), the U.S. economic data showed strong performance. Manufacturing data and new home sales showed the U.S. economic recovery. Bernanke hinted in the House of Representatives testimony supports on financial easing and triggered the stock market rebound, but euro did not get the boost. The performance of euro under pressure was mainly due to worries about the Italian political situation.
Italian general election may reignite market pressures, both in terms of economic or political, will strengthen the fact that the euro zone still faces huge pressure.
The European Central Bank said that the Euro zone’s bank loans to households increased by 8 billion euros in January; December last year had a reduction of 2 billion euros. However, enterprises loans continued to decline, loans to non-financial enterprises decreased 8 billion euros; December last year was down 49 billion euros. Capital Economics in London said market conditions in the euro area had a slight improvement, but the euro zone's overall economic situation remains extremely difficult.
The European Central Bank (ECB) announced that, seasonally adjusted, the Eurozone January M3 money supply’s annual increase was accelerated to 3.5%, the market expected to slow to 3.2%. In the same period, M1 money supply rose 6.7% year-on-year.
The BK Asset Management Company KATHYLIEN said, Euro depends crucially on the Italian bond yields. If in this week the country's borrowing costs continued to rise, it is difficult for the euro to maintain above 1.30. However, if yields began to fall and the market was optimistic to Bersani Berlusconi alliance, the chance of rebound in the euro / dollar will increase.
Euro Trend
EURUSD is bearish, the dollar is still facing strong selling pressure, and the current downtrend pattern has not changed. The current key support is at 1.3000, if the support is effectively broken, the target will see 1.2910. The upside resistance at 1.3100 , and stronger resistance at the 1.3300.
Analysts recommended shorting the euro / dollar at 1.3060, target 1.3020, exits at 1.3070.
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