Forex: EUR/USD peaks at 1.3121 on better EMU confidence

Although consumer confidence in the Eurozone only improved from -23.9 to -23.6 in February, as expected, business climate rose from -1.09 to -0.73 (consensus of -1.04), industrial confidence improved from -13.8 to -11.2 (consensus of -13.2), services sentiment rose from -7.7 to -5.4 (consensus of -8.5) and economic sentiment indicator improved from 89.5 to 91.1 (consensus of 89.8).

Improving figures pushed the EUR/USD to a jump to 1.3121 high, where profit taking pulled the pair back to just below the 1.3100 area.

Confirming concerns of Italy's political stalemate was the Italian 10-year bond auction that saw yields rising from 4.17% to 4.83%. The 5-year sale also found yield moving up from 2.94% to 3.59%.

Commerzbank analysts believe there may be a near term rebound ahead of further losses after yesterday's reluctance in breaking below 1.3000 and ‘doji’. “Overhead lies a band of resistance at 1.3293/1.3335. This is the location of the 55 day ma, the previous 3 month uptrend and an accelerated downtrend – while capped here the market will remain directly offered”, wrote analyst Karen Jones.