Euro dollar is currently above important resistance, as hope for some new deal in Greece, a positive comment from the ECB and further IMF help is emerging. In the debt front, Spain exceeded funding targets once again, and also France had a good auction as well. Will this be sufficient to support the break? Today is also a busy on the US calendar.
Here’s an update on technicals, fundamentals and what’s going on in the markets.
EUR/USD Technicals
- Asian session: The pair stabilized under resistance at 1.2873, and broke higher in the European session.
- Current range: 1.2873 to 1.2945.
- Further levels in both directions: Below 1.2873, 1.2760, 1.2660, 1.2623, 1.2580, 1.2520, 1.24, 1.2330 and 1.2144.
- Above: 1.2945, 1.30, .13060, 1.3145, 1.3212 and 1.3280.
- The break above 1.2873 still needs to be confirmed. This is a tough line.
- 1.2660 returns to support after being a double bottom. Really strong support is at 1.2587.
Euro/Dollar in low ground- click on the graph to enlarge.
EUR/USD Fundamentals
- 9:00 ECB Monthly Bulletin. The statement included a positive comment: signs of stabilization in the euro-zone.
- 9:00 Euro-zone Current Account. Exp. +0.5 billion. Actual -1.8 billion.
- 10:10 Spanish bond auction funds 6.61 billion, more than 3.5-4.5 billion that was expected. Yields were lower once again.
- 10:15 French bond auction sees decent demand as well.
- 13:30 US Unemployment Claims. Exp. 387K.
- 13:30 US CPI. Exp. +0.1%. Core CPI exp. +0.1%.
- 13:30 US Building Permits. Exp. 0.68 million.
- 13:30 US Housing Starts. Exp. 0.69 million.
- 14:00 US Philly Fed Manufacturing Index. Exp. 10.7 points. See how to trade this event with USD/JPY.
For more events later in the week, see the Euro to dollar forecast
EUR/USD Sentiment
- IMF Hope: The International Monetary Fund might receive an increase of its funds to help Greece and other countries. This helped the markets, even though the chances of this happening are low. The US is reluctant to provide more funds.
- Greece Hope: According to fresh reports, a deal between bondholders and Greece regarding a haircut is moving forward, after talks broke down last Friday. On the other hand, a report about Greek banks showed a shortfall of 15 billion euros, worse than estimated. These events aren’t fully priced in.
- German hope: Apart from getting negative yields on bond auction, the ZEW Economic Sentiment jumped. While it still shows pessimism, there is a huge improvement in this usually gloomy indicator.
- Portugal deteriorates: The biggest victim of the multiple S&P downgrades is Portugal, which saw its yields leap. The chances of a default there are rising. The bond auction today will be closely watched. The downgrade of the bailout fund (EFSF) hasn’t hurt its bond auction. Also France, which got the historic downgrade, survived it quite well.
- Chinese growth: The economic giant grew at a pace of 8.9% (annually) in Q4 according to its quick figures. This was the match that sparked a short-squeeze rally in EUR/USD.
- EMF sees stabilization: The president of the ECB has another role, as the head of the stability body. He warned that little progress was made since the decisions about PSI in October. This is a different tone than the calming one heard at the ECB press conference.
- Strong US figures once again: The Empire State Manufacturing Index exceeded expectations and raises expectations for the more important Philly Fed Index. On the other hand, after many months of improvement in jobless claims, the US saw a setback with a rise to 399K.
- Tensions around Iran remain high: According to reports, the US is asking Israel not to act alone against Iran’s nuclear program. Tensions are already high around the Straights of Hormuz, as Europe moves slowly towards an oil embargo on Iran.
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