Home EUR/USD Oct. 29 – Steady As Markets Await Key US
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EUR/USD Oct. 29 – Steady As Markets Await Key US

EUR/USD has edged lower in Tuesday trading. The pair is trading  in the mid-1.37 range  in European trading. US releases continue to raise concerns, as Pending Home Sales  declined by  5.6% in September. It’s the second straight day with no releases out of the Eurozone. Tuesday will be busy in the US, as the markets wait for  four releases – Core Retail Sales, Retail Sales and PPI and Consumer Confidence. As well, the Fed meets for a two-day policy meeting, beginning on Tuesday.

Here is a quick update on the technical situation, indicators, and market sentiment that moves euro/dollar.

EUR/USD Technical

  • In the Asian session, EUR/USD was steady.  The pair hit a high of 1.3794 but  retracted late in the session and consolidated at 1.3777.  EUR/USD has edged lower in the European session.
  • Current range: 1.3710 to 1.3800.

Further levels in both directions:  

  • Below: 1.3710, 1.3650, 1.3570, 1.3500, 1.3460, 1.3415, 1.3325 and 1.3240.
  • Above: 1.3800, 1.3870, 1.3940, 1.4036, 1.41 and 1.4250.
  • 1.3800  has reverted to a resistance line.  1.3870 follows.
  • 1.3710 is providing support.

EUR/USD Fundamentals

  • 12:30 US Core Retail Sales. Exp. 0.4%.
  • 12:30 US PPI. Exp. 0.2%.
  • 12:30 US Retail Sales. Exp. 0.2%.
  • 12:30 US Core PPI. Exp. 0.1%.
  • 13:00 US S&P/CS Composite-20 HPI. Exp. 12.4%.
  • 14:00 US CB Consumer Confidence. Exp. 75.2 points.
  • 14:00 US Business Inventories. Exp. 0.3%.

* All times are GMT.

For more events and lines, see the Euro to dollar forecast.

EUR/USD Sentiment

  • Weak US numbers raise concerns: The new trading week did not get off to a good start, as Pending Home Sales plunged 5.6%, its worst result since April 2011. The markets were caught off guard, as the estimate stood at 0.5%. This dismal reading comes on the heels of poor employment and manufacturing data last week. Tuesday has four key releases, and the dollar could take a hit if these numbers don’t look sharp.
  • Markets eye ADP Non-Farm Payrolls: After last week’s disappointing employment numbers, we’ll get a look at ADP Non-Farm Payrolls on Tuesday. Although this is not an official release, it is a key employment release which can move the markets. Last week, Unemployment Claims came in above the estimate and Non-Farm Payrolls tumbled to a six-month low. The US unemployment rate dipped to 7.2%, a five-year low, but this does not point to increased employment, as the participation rate remained at 63.8%, its lowest level since 1978. These figures indicate that the US labor market continues to have difficulty creating new jobs. The weak readings are weighing on the US dollar, which finds itself at two-year lows against the euro.
  • Euro PMIs fall flat: Late last week, PMIs across the Eurozone were a big disappointment. PMI numbers from Germany, France and the Eurozone all fell short of their estimates, and most posted a drop compared to the previous release. However, all except French Flash Manufacturing PMI remained above the 50 level, pointing to slight expansion. The latter has not been able to crack above the 50 barrier since January 2012, indicating ongoing contraction in the French manufacturing sector. The high-flying euro managed to brush aside the weak releases, but further weak data out of the Eurozone could hurt the continental currency.
  • Fed unlikely to taper QE in 2013: The crisis mood in Washington has cleared for now, but the recent agreement hammered out in Congress provides short-term relief only, as it raises the debt ceiling until early February and funds the government until mid-January. The underlying budgetary issues remain unresolved, and in this muddy situation, the Fed is unlikely to push the taper trigger until early 2014. Last  week’s disappointing employment numbers will add to the likelihood that QE tapering is off the table for now, and that means continued pressure on the US dollar.

Kenny Fisher

Kenny Fisher

Kenny Fisher - Senior Writer A native of Toronto, Canada, Kenneth worked for seven years in the marketing and trading departments at Bendix, a foreign exchange company in Toronto. Kenneth is also a lawyer, and has extensive experience as an editor and writer.