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Commerzbank: comments on EUR/USD
Technical analysts at Commerzbank say that the European currency opened the week in a bullish mood trading versus the greenback.
In their view, the pair EUR/USD is heading up to the key resistance at February maximum of 1.3862 and further towards the 1.3950/1.4000 area representing 78.6% Fibonacci retracement of the decline from November maximums and the 200-day MA. The specialists expect that when euro reaches the target zone, it will fail.
On the downside, the single currency will find support in the near term at 1.3705/45 and then at 2-month support line at 1.3635/11
Mizuho: USD/JPY will drop to 80.21
The greenback went down versus Japanese yen from maximum of the middle of February at 83.95 to the 3-week minimums in the 81.60 area. Technical analysts at Mizuho Corporate Bank claim that all technical indicators signal that the pair USD/JPY will keep declining. Such situation continues since July. In their view, US currency will inevitably go down to retest multi-year minimum at 80.21.
The specialists note that US dollar is trading at the lower part of a triangle and is likely to breach the pattern. According to Mizuho, the next question is how the market will react at the all time low of 79.75 hit in 1995.
US dollar under pressure because of rising oil prices
US dollar was under pressure because of the rising oil prices as investors worried that US economy will be affected more than others taking into account the fact that it strongly depends on consumer spending. According to Deutsche Bank, a $10 increase in oil reduces US growth over two years by 0.5 percentage point. Last week crude oil reached $112.14 a barrel in London, the highest level since August 2008.
Analysts at Bank of Tokyo Mitsubishi UFJ say that rising oil prices help to widen the perceived policy divergence between the Fed and other major central banks. While the ECB regards rising crude as an upside risk to inflation, the Fed's view is that it will be negative for the economic growth. As a result, the European currency is likely to outperform the greenback in the near term. Strategists at UBS believe that the American currency will stay weak for now and advise investors buying euro, pound and Swedish krona.
The pair EUR/USD rose to 3-week maximum in the 1.3840 area. In order to get more bullish momentum euro has to overcome 2011 maximum at 1.3862.
The major events this week are the congressional testimony by Fed's Chairman Ben Bernanke on Tuesday and the ECB meeting on Thursday.