Forex Flash: EUR/USD in another leg lower if slides below 1.2950/60 – TD Securities

The EUR/USD is staging mixed messaged, according to TD Securities analysts: "After Draghi downplayed the discussion on rate cuts last week, it seemed like the EUR could be staging a turn around.  But then we saw the very strong US employment report that muddied the waters somewhat for EUR/USD”, wrote analysts Shaun Osborne and Greg Moore, now more neutral but biased in favor of the USD this week. “A break below 1.2950/60 should be a good signal that EUR/USD makes another leg lower, while a climb above 1.3120/30 would be a strong signal that the single currency is turning around”, they wrote.

In regard to the Eurozone, there will be a EU Leaders Summit beginning Thursday night and the new Italian Parliament being sworn in on Friday. The first “seems less market moving, but may provide direction on easier budget targets for some countries, plans for a Cyprus program, easing repayment plans for Ireland and Portugal, and bank recapitalizations from the ESM”. The latter issue will see the Italian President starting formal meetings with parties next week on forming a government, “so Italian headlines will likely once again resurface starting Friday”, wrote analyst Alvin Pontoh.