Euro Range Bound As EU Ministers Meet On Russia Sanctions

 | Jul 22, 2014 04:51AM ET

Euro stays in tight range as markets are awaiting the meeting between EU foreign ministers in Brussels today. There were expectations that EU will approve new sanctions on Russia regarding the suspected role in downing of a Malaysia Airlines flight last week. UK prime minister Cameron called for "hard-hitting" measures yesterday and said to influence Russia, there must be a sense that "the rest of the world is actually going to team up and put in place sanctions that will damage Russia's economy". However, such view might not be shared by all other EU ministers. French foreign minister played down the expectations and noted that EU would are just "expected to respond to the guidelines set out" last Wednesday, a day before the incident. There were talks that EU could just speed up the imposition of the agreed sanctions rather than expanding them. And Holland's stance would be crucial today as it suffered the greatest in the incident.

Euro's reaction will be closely watched today even though we're not expecting much. The common currency stayed generally soft against other major currencies but most are staying in range. EUR/CADformed a short term bottom at 1.4439 but subsequent recovery was rather weak. The cross turned into sideway consolidation rather then reversed the trend from 1.5585. Deeper fall is expected in near term and would likely target 161.8% projection of 1.5585 to 1.5003 from 1.5305 at 1.4363 and below. But considering bullish convergence condition in daily MACD, strong support should be seen at 38.2% retracement of 1.2126 to 1.5585 at 1.4264 to contain downside and bring reversal.