After an exciting week, EUR/USD enjoyed a quiet weekend. The pair is steady in early Monday trading, ahead of a key Eurogroup meeting later today. US releases ended last week on a sour note, as consumer sentiment looked very weak. The US markets are closed today for Martin Luther King Day. In the Eurozone, German PPI, today’s lone release, declined for the second straight month.
EUR/USD Technical
- Asian session: Euro/dollar was steady, as the pair touched a high of 1.3333, and consolidated at 1.3322. The pair is unchanged in the European session.
- Current range: 1.3290 to 1.3360.
Further levels in both directions:
- Below: 1.3360, 1.3290, 1.3255, 1.3170, 1.3130, 1.3110, 1,3030, 1.30, 1.2960, 1.28, 1.2750, 1.2690, 1.2624 and 1.2590.
- Above: 1.34, 1.3480, 1.36, 1.3750 and 1.3838.
- 1.3290 is providing the pair with support. 1.3255 is stronger.
- On the upside, 1.3360 has now reverted to a resistance role.
Euro/dollar steady ahead of Eurozone meeting – click on the graph to enlarge.
EUR/USD Fundamentals
- 7:00 German Producer Price Index. Exp. 0.0%. Actual -0.3%.
- All Day: Eurogroup Meetings.
- Deutsche Bundesbank President Jens Weidmann Speaks.
For more events and lines, see the Euro to dollar forecast
EUR/USD Sentiment
- Eurogroup looks to aid banks: The Eurogroup will meet on Monday for the first time in 2013. The main order of business will be a look at direct bank recapitalization, whereby banks would borrow directly from the ESM. This is intended to replace the process whereby governments simply borrow more funds to bolster their ailing banks. However, there are deep divisions on the issue within the Eurozone, and Monday’s talks with be preliminary in nature.
- Juncker Steps Down: Jean-Claude Juncker, who headed the Eurogroup of finance ministers for the past eight years, will be stepping down from this position today. Juncker, a staunch defender of the euro and of European unity, presided over the global financial crisis in 2008, and the more recently, the Eurozone debt crisis, which threatened to destroy the euro. He will be replaced by Jeroen Dijsselbloem, the finance minister of the Netherlands. There was considerable jockeying between France and Germany as to who would be Juncker’s successor, and Dijsselbloem was considered a compromise candidate. The new head will certainly have his work cut out for him in Brussels, as he only became the Dutch finance minister in November.
- US Manufacturing, Consumer Confidence numbers disappoint: The US continues to send out mixed messages in its economic releases, making it difficult to evaluate the extent of the US recovery. Housing and Employment numbers looked excellent, hitting multi-year highs. The good news, however, was tempered by manufacturing and consumer confidence data. The Philly Fed Manufacturing Index surprised the markets with a very sharp drop, and fell back into negative territory.Coming on the heels of the Empire Manufacturing Index, which also looked dismal, these indicators point to significant contraction in the US manufacturing sector, which is weighing on the fragile economic recovery. Last week wrapped up with Preliminary UoM Consumer Sentiment, which had its worst performance in a year. The indicator dropped to 71.3 points, well below the forecast of 75.1 points. Consumer spending and confidence is a critical component of economic growth, and these numbers will have to improve significantly if the US recovery is to gain traction.
- Euro fluctuates after ECB comments: Earlier in the week, the euro dropped following negative remarks by Jean-Paul Juncker, only to reverse direction after another senior ECB official stated the opposite. Juncker, held of the Eurogroup, shook up the markets after bluntly warning that the “euro foreign exchange rate is dangerously high”. The markets jumped on his comments, and the euro quickly headed south, falling below the 1.33 line. On Wednesday, a member of the ECB governing council, Ewald Nowotny, weighed in, stating that the Eurozone situation had shown improvement, and the ECB was not concerned about the recent gains by the euro. These positive sentiments gave a boost to the euro, as it barreled above 1.33. Market players, scrambling to keep up with the latest comments of the day about the value of the euro, must be hoping for more action and less talk from senior ECB officials.
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