Search ForexCrunch

My view on the EUR for the next few days can be described as “range-bound”.   Traders continue to await the next step in the euro-zone crisis as Spain continues to hold out on making an official request for support which would be a key step toward OMT by the ECB.

At the moment the EUR is trading above the 1.3000 level and according to one trader I spoke with this morning, the market is feeling the “Romney effect” a day after the first of the presidential debates.   While we have a long way to go in this election race before voters decide on November 6, it seems the “risk” takers like what they heard last night.   The stock market has rallied a bit this morning as well.   Taking a look at the USD/CAD and AUD/USD and they way they have strengthened today, one could make this argument.

I am still a little skeptical.   To this old trader it seems the probing lower earlier this week really didn’t work so “if it doesn’t go down, it might as well go up”.   Therefore, we will try the upside.      Resistance will come in around the 1.3040 area, then 1.3070.   Once again, I won’t be concerned on the upside until we approach the topside 1.3170 area

During his press conference today, ECB President Draghi gave no clear signal on the next policy step may be undertaken.   An additional rate cut is still expected, but most expect December for the earliest month for that.

Of course, one must consider tomorrow’s employment report from the US as “lightning rod” to more currency movement.  A headline NFP number between the expected 120-130,000 level will be a big “who cares”.   But we have all been watching this number long enough to know that the forecasted number is never the one printed.   So depending how far off this number is, will affect the move and direction of the EUR.   With QE3 in its infancy a strong report would be is favorable for the dollar, but one strong report is unlikely to alter QE3 expectations dramatically.