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26 Jun 2013
The Greenback awaits next catalyst
FXstreet.com (Barcelona) - Following the wildest sequence of swings seen in all 2013, volatility in the last 2 days of trading in FX land have come to a halt, as traders await new signals to either continue buying the buck or withdraw some support.
While upbeat economic indicators out of the U.S. permitted the greenback to keep its gains, the spectacular rally courtesy of a 'big assumption', as it is that the Fed will start tapering in the near term, looks a bit overdone.
Fed speeches key
As Kathy Lien, Co-Founder at BKAssetManagement, notes: "After such an extensive rally, the market is waiting for some confirmation that the Federal Reserve is on track to taper this year and won't do too much damage on the U.S. economy. The latest economic reports suggests that the economy may be able handle less stimulus but that is far from certain."
The key to gauge this week behaviour, however, lies on whether or not other FOMC members agree with the idea of scaling down the asset purchases, Lien says; "Right now, currency traders are in wait and see mode as they look forward to the next big catalyst - which could come from the speeches by Fed officials."
While there are a handful of U.S. policymakers scheduled to speak, only three are voting members, Dudley, Powell and Stein, so they will be the ones most followed by traders all around the world.
European Finance Ministers to resume talks over banking union
Moving to Europe, the focus will be in the resumption of negotiations among European Finance Minister to agree on the so called 'bail-in' rules, which refers to agreeing on the distribution of costs in future collapses of European banks. The latest round of conversation hit an impasse over the weekend.
On Wednesday, decision-makers will meet again ahead of a EU Summit that takes places Thursday, in order to make further progress over the banking union. Marc Chandler, Global Head of Currency Strategy at BBH, highlights that failure to make progress will most likely hit investors confidence in the Euro.
EUR/USD still looks technically bearish
Reviewing the current technical status of the EUR/USD, from a intraday perspective, the 4 hours chart still shows technical readings in negative, with the downside still favored, according to FXstreet.com Chief Analyst Valeria Bednarik. A break below 1.3060 is a pre-requisite to confirm deeper falls, Bednarik added.
While upbeat economic indicators out of the U.S. permitted the greenback to keep its gains, the spectacular rally courtesy of a 'big assumption', as it is that the Fed will start tapering in the near term, looks a bit overdone.
Fed speeches key
As Kathy Lien, Co-Founder at BKAssetManagement, notes: "After such an extensive rally, the market is waiting for some confirmation that the Federal Reserve is on track to taper this year and won't do too much damage on the U.S. economy. The latest economic reports suggests that the economy may be able handle less stimulus but that is far from certain."
The key to gauge this week behaviour, however, lies on whether or not other FOMC members agree with the idea of scaling down the asset purchases, Lien says; "Right now, currency traders are in wait and see mode as they look forward to the next big catalyst - which could come from the speeches by Fed officials."
While there are a handful of U.S. policymakers scheduled to speak, only three are voting members, Dudley, Powell and Stein, so they will be the ones most followed by traders all around the world.
European Finance Ministers to resume talks over banking union
Moving to Europe, the focus will be in the resumption of negotiations among European Finance Minister to agree on the so called 'bail-in' rules, which refers to agreeing on the distribution of costs in future collapses of European banks. The latest round of conversation hit an impasse over the weekend.
On Wednesday, decision-makers will meet again ahead of a EU Summit that takes places Thursday, in order to make further progress over the banking union. Marc Chandler, Global Head of Currency Strategy at BBH, highlights that failure to make progress will most likely hit investors confidence in the Euro.
EUR/USD still looks technically bearish
Reviewing the current technical status of the EUR/USD, from a intraday perspective, the 4 hours chart still shows technical readings in negative, with the downside still favored, according to FXstreet.com Chief Analyst Valeria Bednarik. A break below 1.3060 is a pre-requisite to confirm deeper falls, Bednarik added.