EUR/USD continues to post losses on Wednesday. In the European session, the pair is trading in the low-1.35 range. The dollar is broadly higher following remarks from Janet Yellen on Tuesday regarding an interest rate hike. The Fed chair continues with her testimony on Wednesday, this time before the House Financial Services Committee. Today’s US highlight is PPI, with the markets expecting a small gain of 0.2% for the June release. Over in Europe, Eurozone Trade Balance softened in June, while the Italian release improved. Later in the day, Germany conducts a 10-year Bond Auction.
Here is a quick update on what’s moving the pair.
- EUR/USD was steady in Asian trading. The pair has posted slight losses in the European session and the euro remains under pressure.
- Current range: 1.3585 to 1.3610.
Further levels in both directions: 
- Below: 1.35, 1.3450 and 1.34.
- Above: 1.3550, 1.3585, 1.3610, 1.3650, 1.3677, 1.37 and 1.3740.
- The next support level is the round number of 1.35.
- 1.3550 is an immediate resistance line.
EUR/USD Fundamentals
- 8:00 Italian Trade Balance. Actual 3.68B. Estimate 3.23B.
- 9:00 Eurozone Trade Balance. Estimate 16.3B. Actual 15.3B.
- Tentative: German 10 year Bond Auction.
- 12:30 US PPI. Estimate 0.2%.
- 12:30 US Core PPI. Estimate 0.2%.
- 13:00 US TIC Long Term Purchases. Estimate 27.4B.
- 13:15 US Capacity Utilization Rate. Estimate 79.4%.
- 13:15 US Industrial Production. Estimate 0.4%.
- 14:00 US Federal Chair Janet Yellen Testifies Before House Financial Services Committee.
- 14:00 US NAHB Housing Market Index. Estimate 51 points.
- 14:30 US Crude Oil Inventories. Estimate -2.1M.
- 16:00 US FOMC Member Richard Fisher Speaks.
- 18:00 US Beige Book.
*All times are GMT.
For more events and lines, see the Euro to dollar forecast.
EUR/USD Sentiment
- Market give Yellen thumbs-up: The dollar responded positively to Fed chair Yellen’s testimony before a Senate committee on Tuesday. Yellen stated that given current economic conditions, monetary stimulus was still required, but rates could increase sooner than expected if inflation and job numbers improved more quickly than forecast. The markets were quick to jump on the prospect of earlier rate increases, and EUR/USD dipped to lower levels. The Fed’s asset purchase program (QE) has flooded the economy with over $2 trillion, keeping interest rates at ultra-low levels, but the Fed has been steadily reducing the program since last December. Currently, the Fed is pumping $45 billion/month into the economy, and the next taper is expected in August, with plans to terminate QE in October.
- Weak German, Eurozone numbers continue: More German economic data, more bad news. This seems to be the latest unwanted trend from the largest economy in the Eurozone, which continues to post weak data, as reiterated by Tuesday’s German ZEW Economic Sentiment. The highly regarded survey of institutional investors and analysts slipped to 27.1 points, short of the estimate of 28.9 points. The indicator has been falling steadily since last November, when it was above the 60-point level. The July figure is the weakest we’ve seen since November 2012. Eurozone ZEW Economic Sentiment brought no relief, as it plunged to 48.1 points, down from 58.4 a month earlier. The estimate stood at 62.3 points. These weak numbers have further raised concerns about the health of the German and Eurozone economies, and the euro could lose more ground.
- A Draghi drag? The president of the ECB maintained a dovish tone in his most recent press conference. With the next meeting not until early August, Draghi is free to release comments in his testimony in front of the European parliament. He will be asked about the AQR, TLTRO and other topics, but what interests the markets are his intentions about Euro-zone QE, something that can weigh on the euro.
- Concerns over Portugal: A major shareholder of a Portuguese bank missed a bond payment. This was a stark reminder that the underlying problems in Europe are far from being resolved. Stock markets fell and the euro also felt the heat, albeit in a limited manner.
More: EUR/USD in downtrend as USD is on the move – Elliott Wave Analysis
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