EUR/USD April 25 – Edges Up as Markets Await US

EUR/USD is  moving higher, as the pair trades in the mid-1.30 range. There was grim news out of Spain,  as the country’s  Unemployment  Rate hit a new record of 27.2%. In the US, the bad news continued as Core Durable Goods slumped. Today’s highlight is US Unemployment Claims, and the markets will be keeping a close eye on this market-mover.

Here is a quick update on the technical situation, indicators, and market sentiment that moves euro/dollar.

EUR/USD Technical

• Asian session: Euro/dollar pushed higher, touching a high of 1.3051 before consolidating at 1.3042. The pair is unchanged in the European session.
• Current range: 1.3000 to 1.3050.

Further levels in both directions:  

• Below: 1.3000, 1.2960, 1.2880, 1.2805, 1.2750 and 1.27.
• Above: 1.3050, 1.31, 1.3140, 1.3170, 1.3255, 1.3290, 1.3350 and 1.34.
• 1.30 is providing support.
• The pair is testing 1.3050. 1.31 is stronger.

Euro  moves up to mid-1.30 range  – click on the graph to enlarge.

EUR/USD Fundamentals

• 7:00 Spanish Unemployment Rate. Exp. 26.5%. Actual 27.2%.
• 12:30 US Unemployment Claims. Exp. 352K.
• 14:00 US Treasury Secretary Jack Lew Speaks.
• 14:30 US Natural Gas Storage. Exp. 33B.

For more events and lines, see the Euro to dollar forecast

EUR/USD Sentiment

• German weakness puts pressure on euro: Germany continues to churn out weak numbers, and this is putting pressure on the euro. The continental currency took it on the chin on Tuesday, dropping sharply as German PMIs looked bad. Manufacturing PMI dropped from 48.9 points to 47.9 points, a four-month low. It was well short of the estimate of 49.0 points. Services PMI fared even worse, falling from 51.6 points to 49. 2 points. This was well short of the estimate of 51.1 points, and the first reading below 50, which indicates expansion, since last November. On Wednesday, German IFO Business Climate dropped sharply, from 106. 7 points to 104.4. This missed the estimate of 106.4 points. The Eurozone continues to stagnate, and has little chance of improving if Germany, the most powerful economy on the continent, doesn’t take the lead. Meanwhile, the weak  Eurozone numbers  have increased talk of an interest rate cut by the ECB, which meets next on May 2.
• US slide continues: The US  continues to  posted a long streak of weak key releases.  Since late March, almost all key  releases  have  pointed   downwards. On Wednesday, it was the turn of Core Durable Goods, which dropped 1.4%. This was well below the estimate of a 0.5% gain. The markets are concerned about the pace and   extent of the US recovery, and will be keeping a keen eye on Unemployment Claims, one of the most important economic indicators.
• Italy nominates Prime Minister: Italy moved one step closer to forming a government, after   Enrico Letta was nominated as prime minister. Italy has been mired in a political vacuum since elections back in February, and the  impasse in the Eurozone’s third largest economy threatened to reignite the zone’s debt crisis. Letta’s Democratic Party does not have a parliamentary majority, so he will have to form a coalition, which could prove difficult. Letta, who is only 46 years old, is considered a moderate. He is expected to try and form an alliance with former PM Silvio Berlusconi.
• G20 Meeting Gives Japan Green Light: There was little surprise that the G20 did not take Japan to task over its monetary policies, which have resulted in the yen taking a tumble. Although Japan has faced a lot of criticism leveled against Japan, the G20 issued a very soft statement about currency devaluation which made no mention Japan, giving it a green light to continue its aggressive easing measures. Finance Minister Taro Aso has insisted that the measures are aimed at stamping out deflation, and the yen’s plunge is a “byproduct”. The bottom line? The BOJ will continue its easing steps, and we can expect the yen to continue to weaken, which will likely impact on EUR/USD.