EUR/USD is getting a bit more comfortable in higher range, following the stress tests and a general weakness in the greenback after some disappointing figures. Today we have more important data, but everything is overshadowed by the all-important Fed decision tomorrow. Will they end QE or won’t they? And when is the rate hike coming? .
Here’s a quick update on technicals, fundamentals and sentiment moving the pair.
- Asian session: The pair traded struggled around 1.27.
- Current range: 1.27 to 1.2750.
Further levels in both directions:
- Below: 1;.27, 1.2660, 1.26, 1.2570 and 1.25.
- Above: 1.2750, 1.28, 1.2850, 1.2920 and 1.30 and 1.31, which is targeted by one bank.
- 1.2750 is key resistance.
- 1.2660 is important support.
EUR/USD Fundamentals
- 6:00 German Import Prices. Exp. -0.1%, actual +0.3%.
- 12:30 US durable goods orders. Exp. +0.4%, core exp. +0.5%.
- 13:00 US S&P/CS Composite-20 HPI. Exp. 5.7%.
- 14:00 US CB Consumer Confidence. Exp. 87.4 points. See how to trade the event with GBPUSD.
- 14:00 Richmond Manufacturing Index, Exp. 11 points.
* All times are GMT.
For more events and lines, see the Euro to dollar forecast.
EUR/USD Sentiment
- Stress tests: The ECB and the EBA released the results of very comprehensive stress tests. They showed that most banks are properly capitalized and most of those who haven’t been so at the end of 2013 have made up for it since. However, some doubt the seriousness of the tests given past failures and the fact that a scenario of deflation wasn’t taken into account. Perhaps it wasn’t taken into account because the ECB will do everything it can to prevent it.
- Weak German business confidence: The IFO joined ZEW with a weak read on German business confidence, contrasting the positive PMIs. All in all, there is still a good chance that Germany slipped into a recession.
- Weak data hurts the greenback: Both pending home sales and Markit’s services PMI came out below expectations. The misses were minor and the indicators are not top tier. Nevertheless, it resulted in some dollar weakness.
- To end QE or not to end QE: What seemed like a done deal is not necessarily so. The usually optimistic and bullish James Bullard suggested that the Fed would not end its QE program in its upcoming meeting but rather continue it due to worries about Europe. This hit the US dollar. Later on, other FOMC members, some of them quite dovish, did reaffirm the end of QE. Markets will probably be nervous towards the October 29th meeting. Inflation numbers will likely have an impact on this decision. See 5 reasons why QE will end.
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