FX:Euro looks for ground after 5-day upmove and 7-month high
FXstreet.com (Barcelona) - The euro printed a fresh 7-month high at 1.3189 in early trading as investors priced in the various events of the weekend. The LDP party won the Japanese general election with about 2/3 of the seats, meaning the lower house will not require the Diet's upper house for legislation approval of its coming agressive policies to tackle deflation. China’s Central Economic Work Conference statement didn't say anything about pro-growth initiatives, but Chinese Xinhua news agency is reporting that the government will loosen monetary policy in 2013.
Also pro-risk trading is news coming from the US that House Republicans may be willing to agree to higher taxes for millionaires after Boehner's statement in favor of raising taxes to above $1 Million incomes from 35% to 39.6% in order to help solving the 2013 budget crisis a.k.a. “fiscal cliff”.
Market trading quietly ahead of the New York opening...
With all the weekend fuss off the shoulders, investors calmed down and have been trading relatively quietly throughout the European morning, with a 25-pip range (from 1.3144 session low to 1.3169 session high). The market may be looking to find sustained ground after the five days in a row trading with gains, summing 312 pips from 1.2877 (Dec-7 low) and 1.3189 (Dec-16 high).
The EMU narrowing s.a. Trade surplus and less widen than expected n.s.a. Trade surplus in October didn't caught investors' attention and the price action remains thin and quiet. The US NY empire state manufacturing index is due at 13:30 GMT and may have a stronger impact.
As Windsor Brokers analysts say: “The Euro remains well supported, with last Friday’s surge through key barriers at 1.3138/70, resulted in testing levels just under psychological 1.3200 level and 30d Bollinger Band during the Asian session”, wrote analyst Slobodan Drvenica, expecting corrective easing as hourly indicators are emerging out of overbought zone, while 4h ones started to reverse.
“However, overall bullish tone remains intact, as clear break above 1.3200 would signal fresh bull phase after three-month congestion under 1.3170/38 peaks”, Drvenica added, pointing to immediate target at 1.3282 (01 May high and psychological 1.3300 barrier), while support is at 1.3140 (20-day EMA), followed by 1.3100 (55-day EMA) and 1.3070 (last Friday low / Fib 38.2% of 1.2876/1.3186 ascend).
