Forex: EUR/USD bounces from 1.3586 low to 1.3650 zone

The market felt compelled to touch Wednesday's low, at 1.3586, after the US NFP data, before bouncing back as the stronger than expected US ISM manufacturing PMI rose from 50.7 to 53.1 in January.

ISM prices paid rose from 55.5 to 56.5, higher than 56.0 consensus. Consumer sentiment in the US rose from 72.9 to 73.8 in January, beating the pessimistic consensus of 71.5. The EUR/USD is already back to 1.3650 zone.

“Yesterday's corrective pattern ended at 1.3540 low and the uptrend has been renewed, targeting 1.3780 area”, wrote Deltastock.com analyst Stoyan Mihaylov, pointing to key support at 1.3590 and crucial on the downside at 1.3540.

Feb 1, 2013

Forex Flash: EUR appreciation could weigh on exports and growth – Goldman Sachs

Last October, we set out our views on the evolution of the single monetary policy in 2013. “In line with our macroeconomic forecasts, our base case was for unchanged ECB policy rates throughout 2013 (and indeed to the second half of 2015). The biggest risk we identified to this view came not from further weakness in economic activity (whether in the periphery or the core) or even the emergence of growing deflationary pressures.” notes the Economics Research Team at Goldman Sachs. Rather, we saw the most likely driver of a rate cut as being a brutal appreciation of the Euro exchange rate (to employ the language of former ECB President Trichet).

Forex: EUR/GBP rallies towards 0.8700

While the EUR/USD is back at strength after a quick return to 1.3586 and is extending gains higher (currently at 1.3682), the GBP/USD nose dived to 1.5737 low. Both together mean a tremendously strong EUR/GBP taking over the market by +1.48% on the day, currently at 0.8696 high.