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14 Feb 2013
Forex: EUR/USD falls on ECB concerns over inflation
The release of the ECB monthly report triggered a new wave of downward movement, from 1.3414 to back below the 1.3400 handle, extending daily losses. The EUR/USD is currently down to 1.3375.
The ECB warned that the stronger Euro may pull inflation below the central bank's target. Its upside risks come from higher administered prices and indirect taxes, as well as higher oil prices, while and downside risks are due to weaker economic activity and, more recently, the appreciation of the Euro exchange rate. The ECB expects economic recovery to start later this year.
"With over 76.4% of 1.3352/1.3518 ascend being reversed so far, immediate focus shifts towards near-term base at 1.3352, also 50% of larger 1.2996/1.3710 upleg, below which to signal resumption of downtrend from 1.3710, towards 1.3300 and 1.3265/70 higher platform / bull-trendline off 1.2660. Negative near-term studies support the notion", wrote Windsor Brokers analyst Slobodan Drvenica.
The ECB warned that the stronger Euro may pull inflation below the central bank's target. Its upside risks come from higher administered prices and indirect taxes, as well as higher oil prices, while and downside risks are due to weaker economic activity and, more recently, the appreciation of the Euro exchange rate. The ECB expects economic recovery to start later this year.
"With over 76.4% of 1.3352/1.3518 ascend being reversed so far, immediate focus shifts towards near-term base at 1.3352, also 50% of larger 1.2996/1.3710 upleg, below which to signal resumption of downtrend from 1.3710, towards 1.3300 and 1.3265/70 higher platform / bull-trendline off 1.2660. Negative near-term studies support the notion", wrote Windsor Brokers analyst Slobodan Drvenica.