Euro Exchange Rates Outlook Today: EUR-USD Hits Session Lows as Noyer Talks Down EUR

By Will Peters

Euro rates are today trading broadly higher but there is a tangible degree of nervousness concerning Emerging Markets and the US FOMC announcement due later today.

Updated: The euro fell to session lows against the dollar after European Central Bank Council member Christian Noyer said that further rises in the value of the euro would be negative.

"The dovish comments came in a session that was otherwise void of economic data or news out of the 18-member bloc. The euro remains vulnerable to further downside against the dollar, especially if the Fed follows through with an expected taper today and signals that its path for continued reductions in stimulus is largely unaffected by recent volatility in global markets," says Omer Esiner at Commonwealth Foreign Exchange.

• The euro dollar exchange rate is trading 0.06 pct lower at 1.3664.
• The euro pound exchange rate is 0.13 pct higher at 0.8255.
• The euro Australian dollar exchange rate is 0.33 pct higher at 1.5623.

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Some negative data just out of the Eurozone has earlier helped push the euro exchange rate a little lower:

M3 Money Supply (YoY) (Dec) came in at 1%, well below the expected 1.7% and below the previous month's 1.5%.Italian business confidence is also looking pretty poor coming in at 97.7, below an expected 98.7 and a decline from the previous months 98.2.

US FOMC ahead

The next big event for markets over the next 24 hours concerns the US FOMC decision.

"A further $10bn taper announcement is now generally expected from the FOMC, so is unlikely to be enough to trigger a significant reaction. There will be more attention on any wording of the statement that gives some indication of the likely pace of tapering going forward, but we would not expect this first meeting of Yellen’s tenure to stray far from the expected path," say Lloyds Bank Research.

Outlook for the euro pound sterling exchange rate

Analyst Gareth Berry at UBS says he is bearish on the euro sterling: "The important resistance is at 0.8349. While this holds, the cross remains vulnerable to extend its bearish trend to test support at 0.8160. A close below which would be the next bearish development."

MIG Bank tell us:

"EUR/GBP declined significantly on Monday near the resistance implied by the steeper declining trendline. A break of the initial resistance at 0.8253 is needed to suggest a return of some short-term buying interest. Hourly supports stand at 0.8210 (24/01/2014 low) and 0.8168. Another resistance lies at 0.8306.
 
"In the longer term, the technical structure remains negative as long as prices remain below the resistance at 0.8350 (13/01/2014 high). Monitor the support implied by the 61.8% retracement (of the 2012-2013 rise) at 0.8160. Another key support can be found at 0.8082 (01/01/2013 low)."

Outlook for the euro dollar exchange rate

"EURUSD lacks direction ahead of the FOMC decision due in the afternoon. We expect the pair to remain well bid above the 21-50 day MA levels (1.3633/53) before decision," say Swissquote.

UBS analyst Gareth Berry says he remains neutral on the euro dollar exchange rate: "MACD has breached the zero line in favour of the bulls. Potential test of resistance at 1.3746 ahead of 1.3893. Support is at 1.3623."

Craig Erlam at Alpari:

"Yesterday’s rebound off the neckline of the double bottom has made the euro dollar exchange rate pair look a lot more bullish in the short term, despite the initial failure to close above the 50 fib level, around 1.37. Based on the size of the double bottom, we should now see a move towards 1.3790.

"Obviously as with all these formations, this is just a rough target but as it roughly coincides with both a previous level of resistance and the 76.4 fib level, it does add a little more comfort. Ordinarily I’m not a big fan of this fib level, or the 76.8 which is the alternative around this level, but as it fits so well on this occasion and falls on a round number, 1.38, it’s probably worth paying attention to. One potential concern is the lack of upward drive following the retest of the double top neckline.

"However, this could just be consolidation in the form of a descending wedge, which is a bullish continuation pattern. Now that we appear to have see a breakout above the formation, the pair could gather some upward momentum. A break above 1.3687, previous high, would back this up, with further targets then being 1.3716 and 1.3739."