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EUR/USD intraday: bullish bias above 1.294

After years of overspending, southern Europe is cutting public sector wages and spending on hospitals and schools, while Belgium and France are also under pressure to control their deficits. That is also translating into less demand for German goods and eating away at business confidence across the bloc.

The euro zone should ease up on deep government spending cuts but stick to the path of reform, the OECD said on Tuesday, adding its voice to those calling for a softening of cost-cutting they see as choking economies.

Budget cuts are at the centre of the euro zone’s strategy to overcome a three-year public debt crisis, but since the bloc sank back into recession this year, policymakers are beginning to question the wisdom of such aggressive deficit reduction.

Against a backdrop of record unemployment and strikes across Europe this month, the Organisation for Economic Co-operation and Development said in a report that simultaneous spending cuts in almost all euro zone countries had worsened the crisis.

It now urged those countries that could afford to, such as Germany, to be prepared to increase spending to help growth.

For OECD countries in total, GDP is forecast to grow a sluggish 1.4% next year and 2.3% in 2014.

The U.S. economy is projected to do a little better. GDP will expand 2% next year, similar to this year, and then step up to a more solid rate of 2.8% in 2014, says the OECD. The report notes that the U.S. should get a lift from a recovering housing market, increasing consumer spending supported by an improving job market, and a rebound in business investment as policy uncertainties fade.

Pivot: 1.2940.
Shayne Heffernan: LONG positions @ 1.295 with 1.3015 & 1.3035 as next targets, then reverse
Beware: The downside breakout of 1.294 will open the way to 1.2895 & 1.2865.
Comment: the pair stands above its support and should reach its previous high.

Opinion published is an intraday view. Green Lines Represent Resistance | Red Represent Support Levels | Light Blue is a Pivot Point | Black represents the price when the report was produced

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Long Term the Euro will Move Lower

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