EUR/USD starts the new trading week with a recovery in the low range. The dip below 1.35 seen on Friday proved to be a false one. The worsening situation in Gaza and the rising tensions about the plane crash in Ukraine continue to dominate the headlines, especially as the calendar seems thin. Can the pair return to the previous, higher range?
Here is a quick update on what’s moving the pair.
- EUR/USD eventually made a move higher but met resistance at 1.3550.
- 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
- 6:00 German PPI. Exp. +0.1%, actual 0%. Another sign of weak inflation.
- 10:00 German Bundesbank report.
*All times are GMT.
For more events and lines, see the Euro to dollar forecast.
EUR/USD Sentiment
- Escalation in Ukraine: The blame game around the downing of MH17 continues with the Ukrainians and the Russians blaming each other. In addition, there are accusations of tampering with the evidence and looting of the belongings of the victims. This leaves a tense atmosphere and we could see more sanctions coming form the West on Russia, something that could hurt the European economies.
- Deadly day in Gaza: The fighting in Gaza intensified on Sunday with higher than normal casualties on both sides. As long as oil production in other countries is not disturbed, there will be no impact on the markets. The deadly day could accelerate efforts to broker a ceasefire.
- 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
Share
