EUR to move higher

Yesterday, I had quite a good harvest from EUR/USD, as it broke out of the inverse Head-and-Shoulders on the hourly chart, triggered by the weaker than expected US CPI and US housing starts figures. As a recap, core CPI increased 0.2% vs 0.3% forecast. I try to avoid USD/CHF sometimes, as it is not as liquid as EUR/USD, and a better way to trade CHF is through EUR/CHF, which is supposedly more liquid.

Moving on to the British Sterling, GBP edged lower against EUR, when the BOE Monetary Policy Committee revealed a 6-1 vote to hike interest rate at the last meeting, and also was pushed down by the highest level of UK unemployment in more than 6 years in Q2, with the unemployment rate standing at 5.5%. Overall, GBP retains a bearish tone against EUR, but may not be so against USD, as the US dollar plunged yesterday across the board, following market’s perception that the Fed has been right after all in holding the interest rates on pause.

EUR/USD is now hovering near the resistance around 1.2867 as I have said yesterday, and the next level to test will be 1.2911, after which, we might see EUR/USD rallying towards 1.2979, which was the daily high of 5/6/06. Expect much profit-taking there.

Now that the US important economic releases have been cleared for this week, let’s look to the Euro/UK calendar for today. The Eurozone CPI is on tap today at 0900 GMT (5pm sg time), while the UK retail sales is out at 0830 GMT (4:30 pm sg time). US leading indicators are out at 1400 GMT tonight.

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