EUR/USD remains on low ground, close to the 1.35 edge as the focus shifts from economic news to two geo-political flare ups: the crash of the Malaysian Airlines plane over Ukraine and the ground operation that Israel has launched into Gaza. These escalations have proven positive for the US dollar and the Japanese yen, but EUR/USD still shies away from the critical support line. We have one more important US figure coming up.
Here is a quick update on what’s moving the pair.
- EUR/USD dipped a bit lower, reaching 1.3515, but basically remained in range.
- Current range: 1.35 to 1.3550.
Further levels in both directions:
- Below: 1.35, 1.3450, 1.34, 1.3375 and 1.33.
- Above: 1.3550, 1.3585, 1.3610, 1.3650 and 1.3677.
- 1.35 is where Draghi sent the pair, and it is critical support.
- 1.3550 remains an immediate resistance line. 1.3585 follows.
EUR/USD Fundamentals
- 8:00 Euro-zone Current Account. Exp. 24.3 billion, actual 19.5 billion.
- 10:30 German Bundesbank president Jens Weidmann talks.
- 13:55 US UoM Consumer Sentiment. Exp. 83.5 points.
- 14:00 US CB Leading Index. Exp. +0.6%.
*All times are GMT.
For more events and lines, see the Euro to dollar forecast.
EUR/USD Sentiment
- Escalation in Ukraine: A passenger plane carrying 298 passengers was shot down over eastern Ukraine. The government in Kiev and the pro-Russian rebels are blaming each other for the downing of the Malaysian Airlines plane which flew from Amsterdam and carried many Dutch nationals. The tragedy could flare up the recently dormant conflict on the edge of the European Union.
- Israel launches ground offensive in Gaza: After 10 days of mutual strikes and several failed attempts to reach a ceasefire, Israeli PM Netanyahu has ordered the Israeli army to enter the Gaza Strip, in order to deal a blow to the militant Hamas organization that controls the area. This is a significant escalation.
- Mixed US data: On the job front, things are improving quite nicely, with another drop in jobless claims and continuing claims. However, big disappointments came from the housing sector with significant drops in both building permits and housing starts. The mixed picture was also reflected in a leap in the Philly figure with unexciting retail sales. We will get another glimpse of the consumer now.
- Yellen hints rate hike likely in 2015: Federal Reserve Chair Janet Yellen concluded two days of testimony on Capitol Hill on Wednesday, testifying before the House Financial Services Committee. Yellen declined to directly answer questions about when the Fed would begin to raise rates, but she did acknowledge that most economists expect the Fed to make a move in the third quarter of 2015. The note about “stretched valuations” in some sectors of the equity markets caught investors’ attention and could serve as a hint that the Fed is set to tighten sooner. The dollar eventually reacted positively.
- Euro data remains mediocre: Final euro-zone CPI for June matched the early print at 0.5% and shows that inflation remains at rock bottom levels. Together with a disappointing ZEW figure from Germany, the recovery remains weak and fragile,. These weak numbers have further raised concerns about the health of the German and Eurozone economies, and the euro could lose more ground.
More: EUR/USD in downtrend as USD is on the move – Elliott Wave Analysis
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