Downbeat OECD forecast puts cap on euro

The euro didn’t think much of the Organisation for Economic Cooperation and Development’s growth expectation for Europe, which was lowered to 1% in 2014 from 1.1% in May.

The call to consider quantitative easing has also helped the single currency pull back against the dollar. German ZEW economic sentiment was unsurprisingly fairly upbeat at 54.6 – not unexpected given the recent all-time highs in the DAX.

I stick to my view yesterday, that unless we see a concerted move through the 1.3540 level we may be looking at a range that’s destined to lower EUR/USD over the near term. The euro hasn’t traded above this level since late October. Capped by the 50-day moving average, with the 50-hour moving average providing a base for the pair for now, the rising support from the one-week uptrend coming in around 1.3480 may provide an intraday target for a trade.

Any break of this support could see the pair fall another 40 points towards the 200-hour MA at 1.3445.

Little real data is due out this afternoon. Traders will have to make do with Federal Reserve members William Dudley and Charles Evans, who are both pencilled in to speak at separate events. Given the conflicting opinions lately from the FOMC, we may see some volatility in this FX pair as statements in relation to tapering hit the wires.

Spot FX EUR/USD chart

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