Foreign exchange: Euro Dollar rate fails to capitalise
Last Updated on Tuesday, 29 March 2011 08:39 Written by Will Peters Tuesday, 29 March 2011 08:37
A break back above 1.4250 will be quite a victory for the bulls and might lead to higher prices.The euro pound rate is 0.212% higher with 1 EUR = 0.8825 GBP.
This morning the euro exchange rate is showing a certain degree of strength. However, some analysts would argue that the euro could have done better considering the foreign exchange market-making news released yesterday.
"The dollar failed to capitalise on some unexpectedly strong growth in its monthly pending home sales and consumer spending data , as Trichet reasserted the need for a rate hike next week to combat “durably above target” inflation levels," says foreign exchange analyst Duncan Higgins at Caxton Fx.
A fresh ECB lending facility to help weak eurozone banks was also taken as a solid indicator that the ECB fully intends to tighten policy.
The US dollar’s recent boost may have been undone by some less optimistic appraisal from the latest Fed speaker, and this pair is now heading back up towards $1.4150.
Euro-investors may look out for German preliminary inflation data released today. Only a significant undershoot within this latter data would put next week’s ECB rate rise in any semblance of doubt.
"The euro exchange rate did well to get back above 1.4100 yesterday and is at 1.4120 this morning. As mentioned the higher than expected German CPI data has given EUR USD a bit of a boost" says Simon Denham at Capital Spreads.
Upside and downside targets over the medium term are 1.4150/95 and 1.4020/3980 respectively.
The medium term picture has changed a little since the bulls got us back to the area 1.4250 and its rejection is a small cause for concern as the last time we saw this EUR USD headed back towards 1.3000.
A break back above 1.4250 will be quite a victory for the bulls and might lead to higher prices.
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