EUR/USD has edged lower on Thursday, as the pair trades in the low-1.36 range in the European session. It’s been an uneventful week for the euro, which has spent most of the week close to the 1.36 line. On the release front, there are no economic releases out of the Eurozone, but the markets will be keeping an eye on Brussels, which is hosting a two-day meeting of EU heads of state. In the US, Thursday’s key event is Unemployment Claims, with little change expected from this key indicator.
Here is a quick update on what’s moving the pair.
- EUR/USD was stable in the Asian session and has edged lower in European trading.
- Current range: 1.3585 to 1.3650.
Further levels in both directions:
- Below: 1.3585, 1.3550, 1.35, 1.3450, and 1.34.
- Above: 1.3650, 1.3677, 1.37, 1.3740, 1.3785, 1.3830, 1.3865 and 1.3905.
- 1.3585 is an immediate support line, serving as a perfect separator of ranges.
- 1.3650 is the next line of resistance. 1.3677 is stronger.
EUR/USD Fundamentals
- Day 1 – EU Economic Summit.
- 12:30 US Unemployment Claims. Estimate 314K.
- 12:30 US Core PCE Price Index. Estimate 0.2%.
- 12:30 US Personal Spending. Estimate 0.4%.
- 12:30 US Personal Income. Estimate 0.5%.
- 14:30 US Natural Gas Storage. Estimate 101B.
- 14:30 US Crude Oil Inventories. Estimate -1.2M.
*All times are GMT.
For more events and lines, see the Euro to dollar forecast.
EUR/USD Sentiment
- US GDP tumbles: US Final GDP in Q1 was much worse than expected. The markets were braced for a decline of 1.8%, but the indicator shocked with a much sharper drop of 2.9%. The dollar lost ground immediately after the release, and the pound managed to briefly push across the 1.70 level. There was more bad news to follow, as Core Durable Goods Orders declined by 0.1%, its first decline in five months. The estimate stood at 0.3%. Durable Goods Orders looked even worse, coming in at -1.0%, shy of the estimate of -0.1%. Despite the sharp contraction in GDP, the currency markets are calm and the dollar is stable against the euro.
- German consumer confidence jumps: On Wednesday, GfK German Consumer Climate looked sharp, as the key indicator jumped to 8.9 points, after spending the past four months stuck at 8.5 points. The estimate stood at 8.6 points. This strong reading comes on the heels of a disappointing German Business Climate, which lost ground for a second straight month, dipping below the 110 line for the first time since December. As the largest economy in the Eurozone, German releases are closely watched by analysts, and key German data can affect the movement of EUR/USD.
- Eurozone PMIs slide: Eurozone PMIs are key indicators of growth in the services and manufacturing sectors, and across the board, the May figures fell shy of their estimates. The German and Eurozone figures remained above the 50-point level, pointing to expansion. However, the French figures remained below the 50 mark, pointing to continuing contraction in the manufacturing and services sectors of the Eurozone’s second largest economy. A worrying trend is that with the exception of Eurozone Services PMI, all of the PMIs posted their weakest reading in 2014.
- Eurozone inflation remains weak: So far, the euro did not lose enough ground even though various European interest rates have fallen after Draghi’s big announcement. This implies yet another month of low inflation in the euro-zone. We will get initial German numbers next week. If the euro remains strong and inflation continues falling, the ECB will have to be even more creative.
- No surprises from Fed: The Federal Reserve tapered QE for the 5th time to $35 billion/month as expected. The Fed also hinted that interest rates will continue to stay low for the foreseeable future, which likely means that we won’t see any rate hikes before the first quarter of 2015. With regard to economic activity, the Fed noted that the recovery is continuing, but it reduced its forecast of economic growth to 2.1-2.3%, down from an earlier forecast of around 2.9 percent. The bottom line? There were no dramatic items in the Fed statement, with one analyst describing current Fed policy as “steady as she goes”. The dollar lost ground against its major rivals following the statement.
More: EURUSD Recovering Towards 1.3700 – Elliott Wave Analysis
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