EUR/USD starts another week in August with slow trading around the 1.34 level. We have seen the pair slide for several weeks, but we haven’t seen a major break in quite some time. Is this the calm before the storm? A slight disappointment in trade balance hasn’t helped the euro that still suffers from the weak GDP numbers last week.
Here is a quick update on what’s moving the pair.
- EUR/USD was uneventful in the Asian session. The pair has posted gains in the European session.
- Current range: 1.3333 to 1.3415.
Further levels in both directions:
- Below: 1.3333, 1.3295 and 1.32.
- Above: 1.3415, 1.3450 and 1.35
- The latest 9 month low of 1.3333 (or 0.75 on USD/EUR) is strong support.
- 1.3450 is the strong resistance line.
EUR/USD Fundamentals
- 9:00 Euro-zone Trade Balance. Exp. 14.9 billion. Actual 13.8 billion.
- 10:00 German Bundesbank monthly report.
- 14:00 US NAHB Housing Market Index. Exp. 53 points.
*All times are GMT.
For more events and lines, see the Euro to dollar forecast.
EUR/USD Sentiment
- No growth in the euro-zone: The euro-zone output remained unchanged in Q2. French preliminary GDP remained flat at 0.0%, unchanged from a month earlier. German preliminary GDP slipped to -0.2%, the first contraction in the German economy since Q4 of 2012. This is certainly worrying. Also other numbers, such as German business confidence, remain pressured.
- German, French inflation remains sluggish: The ECB has tried to stave off deflation concerns with interest rate cuts, but inflation levels have not risen. Eurozone Final CPI dipped to 0.4%, down from 0.5% a month earlier. Eurozone Final Core CPI, a minor event, remained unchanged at 0.8%. Draghi did not seem worried about this, but did go to explain why EUR/USD should slide.
- US jobs data is OK: The Fed favorite JOLTS figure continued advancing, even if this time it didn’t stand out. Weekly jobless claims bounced back up above 300K, but the 4 week moving average remains low and this could certainly encourage the Fed.
- Fed focus: This week’s FOMC meeting minutes will supply new information about the internal thinking at the central bank. They usually tend to move markets despite the publication at a time of low volatility. Yet this is only the first course: Janet Yellen will give a speech in Jackson Hole on Friday at a gathering of central bankers. The speech is closely watched. Will she take a step forward and acknowledge the recovery or remain extra cautious?
- Geopolitics stable for now: Hotspots in Ukraine and the Middle East remain tense and could have dramatic effects on the markets. The US has accused Russia of massing troops on its border with Ukraine, and tensions are high as the EU has slapped stronger sanctions on Russia, while Moscow has retaliated by banning many food imports from the West. The euro-zone could see food prices going down due to excessive supply. In addition, US president Obama has ordered airstrikes in a remote area of Iraq to prevent ISIL extremists from murdering Yazdi civilians, yet this hasn’t disrupted oil production so far. Things are a bit quieter in Gaza, as a ceasefire between Hamas and Israel has been extended for another five days.
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