EUR/USD is trading on high ground above 1.27, riding on a fresh wave of dollar weakness. The rout in stock markets is boosting the yen but not the greenback in this round. The euro manages to ignore worries coming from all over the world about the euro-zone economic situation. A slip into recession seems imminent.
Here’s a quick update on technicals, fundamentals and sentiment moving the pair.
- Asian session: The pair moved higher reaching 1.2767 and then drifted lower…
- Current range: 1.27 to 1.2750
Further levels in both directions:
- Below: 1.27, 1.2660, 1.26, 1.2570 and 1.25.
- Above: 1.2750, 1.28 and 1.2860
- 1.2750 is still resistance, despite the temporary breach.
- 1.2660 strengthens as support.
- 6:45 French CPI. Exp. -0.3%.
- 9:00 German ZEW Economic Sentiment. Exp. 0.2 points. See how to trade the figure with EUR/USD.
- 9:00 Euro-zone industrial production. Exp. -1.5%.
- 11:30 US NFIB Small Business Index
* All times are GMT.
For more events and lines, see the Euro to dollar forecast.
- More signs of German weakness?: Both German factory orders and industrial output fell sharply in August. While there is some seasonality here, this “hard data” contrary to the “soft data” coming from PMIs, is certainly worrying. We’ll now get news about German business confidence. See how to trade the ZEW number with EUR/USD.
- Stock market sell off: The gloom around the world, coming from IMF worries among others is hitting the stock market. This is not triggering a “flight to safety” to the US dollar at the moment, but we’ve seen such phenomenons in the past.
- Euro rate hikes not before 2017: In his speech in Washington, Draghi maintained a dovish tone, vowing to do what is necessary to battle low inflation and repeated his usual stance. What he also said is that markets see a move on the rates only in 2017, and this is certainly a long time off. The euro dropped on Draghi’s comments.
- Dovish FOMC minutes: The meeting minutes from the latest FOMC meeting showed that the Fed is worried about global growth and also about the strength of the dollar, that could both hurt exports and trigger disinflationary pressures. The dollar fell across the board but later recovered.
- Strong US data: The JOLTS figure was the best since 2001 and also the Non-Farm Payrolls were quite good. This seems to be forgotten now as the dollar bears regained control after a very long time. They were joined by another strong jobs number: weekly claims remained low at 287K, making the moving average the lowest since 2006. The good data gave the impression that the dovish minutes are somewhat outdated.
In our latest podcast, we talk about the US labor market, run down the FOMC minutes, reflect on falling oil and discuss next week’s events: