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FOREX Watch: EUR/USD shows signs of reversal

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FOREX Watch: EUR/USD shows signs of reversal

The euro exhibited strong upside earlier this week, as it appeared poised to break free from its range-bound trade against the US dollar. The rally was short-lived, as the range-bound EURUSD was on the retreat Wednesday. The EURUSD pair slipped more than 0.3 percent in the European and North American sessions, bottoming out at 1.3361.

The markets were consolidating Wednesday ahead of the FOMC meeting minutes. Exacerbating the euro’s decline were upbeat housing data from the US. According to the National Association of Realtors, the sale of existing homes jumped 6.5 percent in July, squashing expectations for a modest 1.5 percent hike. The US dollar carried its momentum forward throughout the day, advancing more than half a percent against a basket of its chief competitors.

Underlying the euro’s recent skid are rumours of a third Greece bailout. Two weeks ago Germany’s Der Spiegel reported the Hellenic nation was in the midst of potentially securing another rescue package. International creditors have already begun coalescing about the feasibility of another rescue package as early as 2014. Greece is showing little-to-no progress on the economic front. In May of this year the unemployment rate rose to a record high of 27.6 percent.

In other trading, the euro was demonstrably weaker against its British counterpart. The euro plunged more than half a percent against pound sterling, sending EURGBP to 0.8542. Earlier in the European session the UK reported better-than-expected CBI figures. The CBI Industrial Trends Survey provides a qualitative outlook on UK manufacturing, as seen through the eyes of senior industry executives. The reading of 0 was significantly better than the expected reading of -8.

The euro will have a chance to rebound Thursday with the release of German and Eurozone manufacturing/services PMI. The Eurozone appears to be in the nascent stages of recovery, but this doesn’t seem to be helping the EURUSD pair, which according to most analysts can expect a major downturn over the near-term.

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