Euro dollar is unwinding its gains and returning to the lower range, below yet another support line. Is the correction already over? Strong European inflation didn’t cheer the euro, that received quite a few bad figures. The last hours of the week, month and quarter will likely provide more choppy trading as positions are adjusted.
Here’s a quick update on technicals, fundamentals and what’s going on in the markets.
EUR/USD Technicals
- Asian session: More drops were seen as the pair struggled around 1.3550.
- Current range: 1.3430 to 1.35.
- Further levels in both directions: Below 1.3430,, 1.3385, 1.3322, 1.3250, 1.3180.
- Above: 1.35, 1.3550, 1.3630, 1.37, 1.3750 1.3838, 1.3950
- Looking up, 1.3550 now turns into important resistance.
- On the downside, 1.3430 is a significant cushion.
Euro/Dollar on the rise – click on the graph to enlarge.
EUR/USD Fundamentals
- 6:00 German Retail Sales. Exp. -0.4%. Actual -2.9%. Big disappointment.
- 6:45 French consumer spending for two months. Exp. +0.2% and +0.4%. Actual -0.2% and +0.2% – lower than expected.
- 9:00 European CPI Flash Estimate. Exp. 2.5%. Actual 3%. Large upside surprise, didn’t cheer the euro.
- 9:00 European Unemployment Rate. Exp. 10%. Actual 10%.
- 12:30 US Personal Spending. Exp. +0.2%.
- 12:30 US Core PCE Price Index. Exp. +0.2%.
- 12:30 US Personal Income. Exp. +0.1%.
- 13:45 US Chicago PMI. Exp. 55.8.
- 13:55 US Consumer Sentiment. Exp. 57.9 points.
* All times are GMT.
For more events later in the week, see the Euro to dollar forecast
EUR/USD Sentiment
- End of month / quarter flows: Some funds are re balancing their portfolios towards the end of this period, which has been characterized by stock market drops and a stronger dollar. This is one of the reasons for the rise seen earlier in the week. This is unwinding now.
- New Zealand double downgrade: One of more sound countries in the world got a credit rating downgrade by two agencies. This sent the kiwi to a 6 month low and also had some negative effect on the euro.
- China is landing: The recent manufacturing PMI released by HSBC showed a third month of contraction, although it was only marginally below the line separating growth and contraction. This points to a soft landing. Many are talking about a hard landing.
- Multi-trillion bailout fund?: The hopes of leveraging the bailout fund (EFSF) are winding down as the denials become louder and louder. While German lawmakers provided a wide approval for the new EFSF powers, the message is that this is the last approval.
- Troika in Greece but default still looms: The EU / IMF troika is in Greece after the parliament there approved the property tax. They are expected to give their stamp on the long delayed tranche of aid to Greece, before the country runs out of money, although these talks run into difficulties. But, the talks about a default will not die. Also here, denials don’t help. According to reports, Greece will be held on a lifeline for 6 weeks, and will default at the beginning of November. The time will be used for preparations in other countries and within banks. These plans may also be awaiting the German parliament’s approval.
- Some positive US news: While the focus remains on the European debt crisis, the significant drop in US jobless claims and the upwards revision of Q2 GDP provided some hope that the US will escape recession. These nice numbers come on the background of many weak ones.
Share
