Week in FX Europe – Is the EUR’s near term strength on borrowed time?

At present, the market is favoring being long the 17-member single currency. But, is the EUR bull worried with the current price action? So far investors remain content with the trade; however, further upside from existing levels may be a struggle – that depends on US politicking.

A few techies are calling for a 1.40 handle in the near-term. They are basing this on some sound reasons like the US fiscal uncertainties and the general impact of technical levels as the market encroaches on its yearly high (February’s 1.3711). Mind you, once the US come back on line investors will again begin to shift their focus back towards the growth superiority of the US economy. Couple this with an ongoing dovish ECB and the EUR strength will surely begin to unravel.

The impacts of the US government shutdown on growth prospects versus any upside surprises to fundamental data (stronger jobs report) will try and keep market volatility to the fore over the next few months. Last months “no” taper surprise has allowed the EUR to breach the mostly occupied tight 2013 range. Any ongoing worries about the US fiscal situation should remain dollar negative and G10 supportive for now and that remains in the House Republicans hands at the moment.


* USD Unemployment Rate
* USD Change in Non-farm Payrolls
* USD Fed Releases Minutes from Sept 17-18 FOMC Meeting
* CNY New Yuan Loans
* AUD Employment Change
* GBP Bank of England Rate Decision
* EUR German Consumer Price Index
* USD Advance Retail Sales
* CAD Unemployment Rate
* USD U. of Michigan Confidence

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell