A Quiet Day In Europe and the US
The major EUR/USD pair did close on Friday at $1.2930, with the rate getting a boost from lows around $1.2910 after earlier rallying as high as of $1.2993. To the attention of binary traders today’s trading so far has been and is likely to remain subdued due to holidays in the UK (Spring Bank Holiday) and in the US (Memorial Day).
Opening around $1.2930 early demand lifted euro-dollar to $1.2944 but this move was capped by offers ahead of $1.2950.
ECB’s Jorg Asmussen was on the wires
As of writing we are making another go at these levels with the rate reaching 1.2949 before pulling back to trade at 1.2942 currently. We already stated expectations are for a quiet day, with no major data points except fresh comments from the ECB governing body.
Early in the European session ECB’s Jorg Asmussen was on the wires. He cited that sound budgets in the Eurozone are a precondition for more growth, and the banking sector has to be more transparent. He stated that it’s a must for France to conduct a pension system reform and although Spain has made some really tough efforts, situation there remains extremely difficult.
Mr. Asmussen proceeded with saying that the ECB does not foresee inflationary risks in the Eurozone in the observable future and should risks arise, the ECB would counter them in a timely manner.
German businesses are now convinced that the German outlook has picked up markedly from the lows set at the start of the year. German business morale has risen far more than expected in the month of May, after a couple of months of falls. Expectations are that Europe's largest economy is gradually getting up to speed after a benign first quarter. T
he Munich-based Ifo institute reported on Friday its business climate index at 105.7 in May from 104.4 in April with the upside coming primarily from a pickup in current conditions. The median forecast in a poll by Reuters was at 104.5. This spells good hopes for Chancellor’s Angela Merkel reelection for her third term in office. Her team has forecasted 0.5 expansion for this year with the first quarter delivering a mere 0.1%.
On the hot political front in Germany a senior official – Social Democrat Nils Schmid, called the proposed EU transaction tax “rubbish” in a probably correct call that such a tax would most likely do more harm than good to the struggling economy.
The official is the finance minister of the region of Baden-Wuerttemberg, he additionally clarified that the European banks would be additionally weakened by such a move and it is highly debatable whether the financial transaction tax can be approved in its current draft version. This tax is a central policy of the Social Democrats who are hoping to unseat Chancelor Merkel in this September’s German general election.
Looking at the chart the Euro remains unscathed by upcoming German political turbulence and is currently gearing up for another test of 1.2950. Should we see an hourly close above that level we are very positive on buying calls on any shallow dips afterwards (5-10 pips).
Major strategy would be to wait for a dip toward the support line around 1.2920-25 marked in red on the chart supplied. That price action will definitely bring binary options investors good opportunities to purchase call options.