EUR/USD got out of its sleepy mood and made a move above 1.34. It reached 1.3405 before retreating back down, and didn’t really challenge the June high of 1.3415 which serves as critical resistance.
Nevertheless, it reached a new two month high. Did this peek provide a peak? Or is it just a hint of things to come?
Update: EUR/USD Breaks to 6 months high
Some optimism from Germany and expectations for muted meeting minutes contributed to the spike.
On the background of no significant figures, the pair began the week by trading in a very limited range.
Germany’s finance minister, Wolfgang Schäuble, stated stronger growth for Germany than anticipated earlier. He also said that Greece will not have another haircut. It is important to remember that Germany is facing elections in two months time. Also Merkel made similar statements which are in contradiction to what the IMF states. The Bundesbank sees a third bailout for Greece in early 2014.
The big event of the week is the release of the meeting minutes from the Federal Reserve. These are minutes from the August meeting, in which the Fed did not make any change in policy. However, this document will provide a great insight into the Fed’s debate towards the all-important decision in September, which might see the “Septaper” – tapering of bond buying (QE).
This upwards move of EUR/USD seems that markets are beginning to wake up, and perhaps they are pricing in muted minutes, which will not provide a confirmation of the Fed’s intent to taper bond buying in September.
Strong resistance appears at 1.3415, followed by 1.3520. On the downside, 1.3350 and 1.3280 provide support.
Further reading:Get the 5 most predictable currency pairs