No mercy for the US dollar. EUR/USD continues higher and has already topped 1.39. The pair continues in the same pattern of rising, pausing and continuing higher, without any real pullbacks. The dovish FOMC minutes continue weighing and the rise of the euro continues despite unimpressive inflation numbers from the old continent. To close the week we have the US PPI and consumer confidence. Can 1.40 be challenged?
Here is a quick update on the technical situation, indicators, and market sentiment that moves euro/dollar.
EUR/USD Technical
- EUR/USD traded quietly higher in the high 1.38s before rising above 1.39.
Current range: 1.3830 to 1.3895.
Further levels in both directions:
- Below: 1.3830, 1.38, 1.3740, 1.37 and 1.3650 .
- Above: 1.3895, 1.3964, 1.40, 1.4050 and 1.4115.
- The mulit-year high of 1.3964 is now at sight.
- 1.3830 turns into important support.
EUR/USD Fundamentals
- 6:00 German Final CPI. Exp. +0.3%, actual 0.3%. This confirms the initial low read.
- 6:00 German WPI. Exp. +0.1%, actual 0%.
- 12:30 US PPI. Exp. +0.1%, core exp. +0.2%.
- 13:55 US UoM Consumer Confidence. Exp. 81.2 points. See how to trade the consumer confidence with USDJPY.
*All times are GMT
For more events and lines, see the Euro to dollar forecast.
EUR/USD Sentiment
- Dollar sell off continues: The dovish FOMC meeting minutes found a weak dollar and accelerated the falls. A rate hike 6 months after the end of QE does not seem to be on the cards. This joins Yellen’s dovish stance beforehand and erases her post rate decision comment.
- US jobs figures look good: Both the JOLTS numbers that the Fed watches as well as the weekly jobless claims beat expectations and hit the best post-crisis levels. Nevertheless, this is not enough to change the bigger picture.
- ECB not in a rush to act: Draghi put QE firmly on the table, and this hit the euro. However, consequent speakers gave the impression that there is no hurry to act, and the ECB does not really have a plan. Buying bonds in the euro-zone is a more complicated task than in other countries. Attempts to talk down the euro by various European politicians have been dismissed by markets. A new anti-euro-strength comment by Draghi could do the job, especially as the pair approaches 1.40 and the Chinese yuan stopped appreciating.
- More weak EZ inflation numbers: France reported modest price rises for March and so did quite a few other European countries, including Spain, which is in deflation. This will probably lead to a downgrade in the final CPI numbers due next week. It is still to be seen if the ECB will act. The April numbers seem more important to Draghi and company.
- Ukraine crisis worsens: Tensions between the US and Russia continue to heat up over the Ukraine. Ukraine’s outstanding gas bill triggered a threat by Russia to cut off supplies. Europe relies on Russian gas.
- Chinese worries: While Chiina’s trade balance was positive, the details showed a serious slowdown. In addition, the government does not seem keen to introduce more stimulus. This causes worries for global growth and has hit stock markets.
More: Any version of euro-zone QE is going have a limited effect
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