06, March 2013

EUR/USD (a 4-hour chart)

EUR/USD (a 4-hour chart)

EUR/USD consolidated on Monday and as being traded between two levels: 1.3055 and 1.3000.The pair remains under pressure and costs 10 points more than it cost on the last Asian session. The pair closed the day below 1.3055.

Euro respites despite the political uncertainty in Italy and the lack of news from the meeting of the Eurogroup. Stocks and currencies have focused on the meetings of the central banks and a Friday report on U.S. employment.

In Europe many traders want the ECB to cut rates still the majority expects that Draghi and his team will keep the refinancing rate unchanged.

"The euro is still likely to remain under pressure however it is testing the lowest level of the range 1.30-1.37. The uncertainty of what the ECB will do in response to the continuing weakness in the eurozone is likely to continue pressing the pair", M.Mohi-Uddin, director of FX strategy at UBS says.

In this context, the TD Securities team notes that the trend remains bearish for at least a week in advance and 1.2900/1.2880 look like the next important support levels. "

We advise to stay out of the market till Tuesday as the ECB meeting is a risky event for the pair. Our forecast that that they will leave rates unchanged (while there's a decent risk that the refinancing rate will be cut) " – says the AP. However, according to Merrill Lynch, if the ECB decides to leave rates unchanged, it will be the first sign of an economic recovery.