EUR/USD continues to lose ground on Wednesday, as EUR/USD trades at the 1.34 line in the European session. On the release front, it’s a busy day, with a triplet of key events in the US – Advance GDP, ADP Nonfarm Payrolls and the Federal Reserve Policy Statement. In the Eurozone, Spanish GDP met expectations, posting a healthy 0.6% gain. However, Spanish CPI softened in June, with a 0.3% decline. Late in the day, Germany releases Preliminary CPI, a key indicator and market-mover.
Here is a quick update on what’s moving the pair.
- EUR/USD is flat in the Asian session. The pair has edged lower in European trading.
- Current range: 1.34 to 1.3450.
Further levels in both directions:
- Below: 1.34, 1.3375 and 1.33.
- Above: 1.3450, 1.35, 1.3550, 1.3585, 1.3610, 1.3650 and 1.3677.
- On the downside, 1.34, a critical line, is fluid.
- 1.3450 is weak resistance. The round number of 1.35 follows.
EUR/USD Fundamentals
- All Day – German Preliminary CPI. Estimate 0.2%.
- 7:00 Spanish Flash CPI. Estimate +0.2%, actual -0.3%.
- 7:00 Spanish Flash GDP. Estimate 0.5%, actual 0.6%.
- Tentative – Italian 10-year Bond Auction.
- 12:15 US ADP Nonfarm Employment Change. Estimate 234K.
- 12:30 US Advance GDP. Estimate 3.1%. See how to trade this event with GBP/USD.
- 12:30 US Advance GDP Price Index. Estimate 1.8%.
- 14:30 US Crude Oil Inventories. Estimate -0.5M.
- 18:00 US FOMC Policy Statement.
- 18:00 US Federal Funds Rate. <0.25%.
*All times are GMT.
For more events and lines, see the Euro to dollar forecast.
EUR/USD Sentiment
- US consumer confidence soars: CB Consumer Confidence was outstanding on Tuesday, pointing to a sharp increase in June. The key indicator jumped to 90.9 points, crushing the estimate of 85.5 points. This was the indicator’s highest level since September 2007. Consumer confidence is closely tracked by analysts since a confident consumer is likely to increase consumption, which is critical for economic growth.
- Markets eye US triplet: Investors have started the week on the sidelines, waiting for Wednesday’s triplet market-moving events. These include the FOMC policy statement, US GDP and ADP Non-Farm Payrolls. The forecast calls for an excellent GDP but soft NFP. German CPI will also be released on Wednesday, and the key index could have a major impact on the movement of EUR/USD.
- Spanish data improves: Most Western countries wouldn’t brag about an unemployment rate around 25%, but the Spanish unemployment rate of 24.5% in Q2 was its lowest level in two years, and beat the estimate of 25.9%. There was more good news on Tuesday, as GDP posted a healthy gain of 0.6%, edging above the estimate of 0.5%. The Bank of Spain has raised its economic forecast for 2014 and 2015, acknowledging a stronger Spanish economy.
- Geo-politics concerns continue: The tensions about the downing of MH17 are rising, as fighting continues in eastern Ukraine between pro-Russian separatists and Ukrainian forces. The EU is preparing to impose tough sanctions against Russia, which could be met with counter-sanctions and weigh on the EZ recovery. In the Middle East, the war in Gaza intensifies with more casualties on both sides as numerous ceasefires have been brokered and broken. Riots have also spread to the West Bank.
- Mixed German data: Soft German data continues to worry the markets. The weak business confidence data from IFO contradicts the upbeat purchasing managers’ indices coming from the euro-zone’s powerhouse. On Tuesday, German Import Prices posted a gain of 0.2%, which was the best showing in 2014. On the inflation front, Germany has not been immune to Eurozone inflation woes, and we’ll get a look at German Preliminary CPI on Wednesday, with the markets anticipating a weak gain. In general, it seems that Germany cannot carry the euro-zone on its own, and a struggling German economy does not bode well for the shaky euro.
More: EURUSD: Vulnerable, Targets Further Downside With Caution
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