… Reality remains ignored
Despite this ongoing bull-run in the cross, advancing almost four big figures since Thursday, the euro fundamentals remain unable to accompany the up-move. Market participants can, in fact, see that the weakness surrounding the real economy is palpable, as shown by the recent indicators. Maybe Germany is doing marginally better, increasing its distance with the rest of the euro bloc members, even with the core ones, but that is of course no guarantee of a better prospect in the upcoming periods. Furthermore, Luxemburg PM, ,J.C.Juncker commented this morning that the euro area would remain stuck into recession, dragging the cross from weekly highs above 1.3120, although this knee-jerk would surely be ephemeral.
Ahead in the day, the FOMC minutes could have the potential to dent the current euro ascent, as consensus expects the greenback to gather some traction on a less dovish tone from the announcements.
All in all, we have seen this before, as many times the grim reality of the euro area was eclipsed by either political developments or bouts of risk appetite.
As of writing, the cross is hovering over the 1.3100 handle, keeping the optimism intact ahead of the FOMC minutes due in the European evening. The interim resistance lies around 1.3115/20, where converge today’s highs and the 38.2% Fibonacci retracement of the February – April decline. If the upside impulse persists, the next hurdle is located around 1.3230 (50% Fibonacci retracement) ahead of 1.3340/45 (61.8% retracement).
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