EUR/USD has posted losses on Wednesday, as the pair has reversed directions after yesterday’s gains. The pair is trading in the low-1.35 range in Wednesday’s European session. In economic news, German PPI declined, as Eurozone inflation indicators continue to look sluggish. In the US, the markets will have plenty of data to review from four key events – Core CPI, Core Retail Sales, Retail Sales and Existing Home Sales. Later on Wednesday, the Federal Reserve will release the minutes of its previous policy meeting.
Here is a quick update on the technical situation, indicators, and market sentiment that moves euro/dollar.
- In the Asian session, EUR/USD was active, as the pair touched a high of 1.3578 early in the session. The pair consolidated at 1.3534, and is unchanged in the European session.
- Current range: 1.3500 to 1.3570.
- Below: 1.3500, 1.3440, 1.3400, 1.3320, 1.3240, 1.3175, 1.31, 1.3050, 1.3000, 1.2940, 1.2890 and 1.2840.
- Above: 1.3570, 1.3650, 1.3710, 1.3800 and 1.3870
- On the downside, 1.3500 continues to provide weak support. 1.3440 is next.
- 1.3570 is the next line of resistance. 1.3650 follows.
- 00:00 Fed Chairman Bernard Bernanke Speaks.
- 7:00 German PPI. Exp. 0.1%, Actual -0.2%.
- 13:30 US Core CPI. Exp. 0.1%.
- 13:30 US Core Retail Sales. Exp. 0.1%.
- 13:30 US Retail Sales. Exp. 0.1%.
- 13:30 US CPI. Exp. 0.0%
- 15:00 US Existing Home Sales. Exp. 5.17M.
- 15:00 US Business Inventories. Exp. 0.3%.
- 15:00 FOMC Member William Dudley Speaks.
- 15:30 US Crude Oil Inventories. Exp. -0.2M.
- 17:10 FOMC Member James Bullard Speaks.
- 19:00 US FOMC Meeting Minutes.
*All times are GMT
For more events and lines, see the Euro to dollar forecast.
- Bernanke reaffirms QE stance: Fed Reserve Chair Bernard Bernanke said Wednesday that the Fed remained committed to the current accommodative monetary policy, which stands at $85 billion in asset purchases every month. Bernanke state that the Fed would not taper QE before it was sure that the employment picture continued to improve. Similar sentiments were expressed by Janet Yellen last week when she testifed before a senate committee. Yellen is expected to take over as the new head of the Federal Reserve in January.
- Markets eye Fed minutes: On Wednesday, the Federal Reserve will release the minutes of its most recent policy meeting. This event is a market-mover and analysts will be paying close attention to the minutes, especially regarding QE. The markets are expecting the Fed to hold off from tapering in December, as US numbers are still not as strong as the Fed would like. Market sentiment is leaning towards the Fed sticking to its present monetary policy, and any surprises in the minutes would likely shake up the currency markets.
- German PPI falters: Eurozone inflation indicators continue to post numbers far below the ECB’s inflation target of 2.0%. German Producer Price Index dipped 0.2%, its third decline in the past four releases. The estimate stood at 0.1%. The low inflation numbers underscore weak economic activity in the Eurozone, and this could make things difficult for the euro.
- Mixed confidence indicators out of Eurozone: Eurozone numbers continue to point in all directions, making it difficult to predict what direction the euro might take. German ZEW Economic Sentiment continues to improve and came in at 54.6 points in October, matching the estimate. This was the indicators best showing in four years. The Eurozone ZEW Economic Sentiment also improved last month, crossing above the 60-level as it reached 60.2 points. However, this was well short of the estimate of 63.1 points. The euro shrugged off these numbers and continues to trade close to the 1.35 line.
- EUR/USD marked by low volatility: Speculation continues on a daily basis as to when the Fed will scale back its QE program, yet we continue to see low volatility in the markets. What gives? This could mean one of two things – either the markets are not expecting a taper in the near future, or they are prepared for a reduction should the Fed press the taper trigger. EUR/USD is showing little movement, and last week the one-month implied volatility on the pair posted its lowest reading since 2007. Of course, things can change quickly in the currency markets, but for now, the EUR/USD waters are quite calm.