Majors Technical analysis and news by fxmania


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US Dollar higher; EUR/USD headed to 1.3400/20

The US dollar is being lifted against its major rivals, despite of the countdown to find a solution to the United States debt ceiling situation is still running and the FOMC minutes released yesterday showed tapering is not in the horizon yet.

Janet Yellen nomination as a next Fed Chairwoman doesn't offer any hopes that easing economic stimulus in the US is near either. Yellen is very well known for her dovishness as well as for her support to keeping low rates. As analysts at Capital Economics noted yesterday,US interest rates "will remain at rock bottom for at least another 18 months and rise only gradually after that."
Read also: Yellen implications on USD goes both ways

And yet, amidst this scenario that arises concerns of an extended USD weakness in the short term, as Trevor Greetham, Head of Asset Allocation at Fidelity Worldwide Investment, wrote, USD advanced, sending GBP/USD and EUR/USD to test support levels.

On the one side, Wednesday's UK data suggested that the pace of recovery there is not as great as initially expected, sending the pound lower. The GBP/USD has begun a deeper correction that now has it trading near support at 1.5930/17. As Karen Jones, technical analyst at Commerzbank explained, directly below here we have the 3 month uptrend at 1.5896. "While it is possible that this will hold the initial test, it is not expected to hold and provoke recovery," she said.

On the other side, the EUR/USD abandoned the 1.36 level and revisited 1.35. According to Karen Jones, EUR/USD finally sold off and looks set for a slide back to 1.3460/53. "This is the August high and together with the 23.6% retracement of the move up from July at 1.3436 should act as the break down point to the 1.3300 3 month channel support," she explained.

However, as José Piñeiro, market strategist at fxmania noted, the euro has retraced very little from recent highs, "meaning that the shared currency remains a big winner throughout the whole US debt situation,"

Precisely, President Barack Obama is appointed to meet House republicans whom are opening up to a short-term lift in the debt ceiling and US Treasury secretary Jacob Lew will testify at 14:30 CET before the Senate Finance Committee about the debt ceiling.

Another key events on Thursday's agenda are the BoE meeting, expected to be a non event, the release of USweekly initial unemployment claims and speeches of ECB president Mario Draghi and Bank of Japan governor Haruhiko Kuroda.

@NoemiFX for fxmania @mania_fx

EUR/USD Chart by Charmer Charts:

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