As Brenda Kelly pointed out yesterday, support for EUR/USD has materialised around the 1.3500 level so far this year, while the last 48 hours has seen this currency-cross break through the 100-day moving average.
The double effect of a second cut to the US debt purchasing scheme and the collapse of emerging markets in equities and currencies has seen the perceived strength of the euro diminish in the last week. As strong as the country’s recovery has been, it will be interesting to see how much more easily US equities are able to absorb these cuts than equity indices around the world.
We could well be in for a rocky period as Chinese new year celebrations start today and the next week will see them enjoying bank holidays. Also in the pipeline is the first set of US non-farm payrolls since the start of tapering; analysts will be paying particular attention as they try to asses any reactions.