Home EUR/USD Aug. 20 – Slide Continues as Markets Eye Fed
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EUR/USD Aug. 20 – Slide Continues as Markets Eye Fed

EUR/USD  has  weakened  on Wednesday, as  the pair  trades below the  1.33  line. The  euro has  surrendered about  100 points so far this week, and  has fallen to its  lowest level since September 2013. It’s a quiet day on the release front, highlighted by the Federal Reserve minutes. In the Eurozone, German numbers continue to struggle, as PPI came in at -0.1%, shy of the estimate of 0.0%.

 Here is a quick update on what’s moving the pair.

  • EUR/USD  edged lower in the  Asian session and the euro continues to drop in European trade.
  • Current range: 1.3333 to 1.3415.

Further levels in both directions:

EURUSD. Daily Forecast August 20png

  • Below: 1.32, 1.3104 and 1.2984
  • Above: 1.3295, 1.3333, 1.3415,  1.3450 and 1.35
  • 1.32 is providing support.
  • 1.3333, a  key line,  has switched to resistance as the euro continues to lose ground.  1.3415 is next.

EUR/USD Fundamentals

  • 6:00 German PPI. Estimate 0.0%., actual -0.1%.
  • 14:30 US Crude Oil Inventories. Estimate -1.3M.
  • 18:00 US FOMC Meeting Minutes.

*All times are GMT.

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

 

EUR/USD Sentiment

  • Fed minutes in spotlight: All eyes are on the Federal Reserve, which will release the minutes of its last policy meeting later on Wednesday. Traders looking for clues as to when the Fed will press the trigger and raise interest rates, but Fed chair Janet Yellen might not oblige. US growth  numbers have been positive, but job data could be better and inflation remains very low. The Fed’s QE scheme  is scheduled to wind up in October, and a rate hike appears to be a question of timing. On Friday, Fed chair Janet Yellen will give a speech in Jackson Hole at a gathering of financial leaders, her first as head of the Fed. The speech  will be  closely watched. Will she take a step forward and acknowledge the recovery or remain extra cautious?
  • US inflation numbers remain low: The US  recovery has been moving in the right direction, but inflation numbers in  the  US remain feeble. On  Tuesday, CPI and Core CPI, the primary gauges of consumer inflation,  both posted paltry gains of 0.1%.   These weak readings followed PPI, a manufacturing inflation index, which also came in at 0.1% last month.  Weak inflation is one reason why the Federal Reserve is in no rush to raise interest rates, as low inflation points to slack in the economy.
  • No growth in the Eurozone: The lack of growth  in the Eurozone continue to raise concerns.  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. 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. Draghi did not seem worried about this, but  did go to explain why EUR/USD should slide..
  • Geopolitical  conflicts  could rattle markets:  Hotspots in Ukraine and the Middle East remain tense and could  have dramatic effects on the markets.  In eastern Ukraine,  more fighting has been reported between  Ukrainian forces and pro-Russian separatists, and  large numbers of Russian forces  remain close to the border.  In Iraq, Kurdish forces, aided by US air strikes, are battling with Islamic State militants. As  political turmoil continues in Iraq, the national  government is becoming increasingly irrelevant. In Gaza, the fighting has renewed   between Israel and Hamas as the latest ceasefire broke down on Tuesday.

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Kenny Fisher

Kenny Fisher

Kenny Fisher - Senior Writer A native of Toronto, Canada, Kenneth worked for seven years in the marketing and trading departments at Bendix, a foreign exchange company in Toronto. Kenneth is also a lawyer, and has extensive experience as an editor and writer.