Tuesday, October 16, 2012
Good fundamentals from both sides of the pond (US & Europe), was the driving force behind the risk on environment for today and we saw the euro outperform major currencies for the past two trading sessions.
During the European Session, the October ZEW indicator for Germany increased for another month by 6.7 points primarily due to investor relief over the ECB's unlimited bond purchasing program. We also heard news that German lawmakers were open to extending a precautionary credit line to Spain, in an attempt to initiate a first step in Spain formally requesting aide from the ESM. This news relieved investor's fears and caused the EUR/USD and other beta assets to rally on risk appetite. This risk sentiment continued into the New York Trading Session.
The EUR/USD continued its climb higher after US CPI, TIC Data, and Industrial Production Data was released better than expected. The US consumber price index rose by 0.6% for the month of September as gasoline costs jumped, which stoked concerns about inflation. Also, net buying of long-term equities, notes and bonds by international investors rose for the month of August to $90 billion as foreign investors sought shelter from the European debt crisis. US industrial output had also rebounded 0.4%.
Wednesday, October 17, 2012
There was a positive handover into today’s trading session for the EUR/USD pair as risk appetite continued to dominate the forex market for another day. The recent credit rating decision to hold Spain at a Baa3 status from Moody’s Investor Services caused the euro to pop higher during the Asian trading session. Although there was risk appetite in the market, the rally was very limited and well subdued. On today, we saw the EUR/USD rally 86 pips from the session low at 1.3054 to the session high at 1.3139.
In today’s technical analysis video, we will describe price action in EUR/USD and identify common areas of support & resistance for trade entry.