EUR/USD Apr. 12 – In Hangover Mode Awaiting Fresh Data

EUR/USD is gradually dropping within the wide range, as optimism fades away. We have quite a busy day on both side of the Atlantic today.  Here’s a quick update on technicals, fundamentals and sentiment.

EUR/USD Technicals

• Asian session:  Euro/Dollar continued falling, and dipped under 1.44.
• Current range –  1.4282 – 1.4450.

• Further levels in both directions: Below 1.4450, 1.4282, 1.4160, 1.4030, 1.3950, 1.3860, 1.3760
• Above:    1.4580, 1.48, 1.50, 1.5144
• 1.4450 went back to being resistance, after it failed to hold the pair.
• The important line of 1.4282 is support, but it’s quite far. Will the pair free fall until this point?

Euro/Dollar on high support  – click on the graph to enlarge.

EUR/USD Fundamentals –

• 6:00  German Final CPI. Exp. +0.5%. Actual +0.5%.
• 9:00  German ZEW Economic Sentiment. Exp. 11.7 points.
• 9:00 All-European  ZEW Economic Sentiment. Exp. 29.8 points.
• 10:15 US FOMC member William  Dudley talks. Dovish tone expected.
• 12:30 US trade balance. Exp. -44.1 billion.
• 12:30 US Import Prices. Exp. +2.1%.
• 14:00 US  IBD/TIPP Economic Optimism. Exp. 45.7 points.
• 18:00 US  Federal Budget Balance. Exp. -157 billion.
• 18:45 US FOMC member  Daniel Tarullo talks.
• 18:50 US FOMC member Richard Fisher talks. Hawkish tone expected.

* All times are GMT.

For more events later in the week, see the  EUR/USD forecast

EUR/USD Sentiment

• Profit Taking: EUR/USD made a huge rally last week. What we’re seeing now is also related to consolidation, before fresh news rock the currencies. Today we have a big load.
• Japanese Nuclear Disaster: The disaster in Japan is probably worse than previously estimated, and likely to be labelled at the same scale with the Chernobyl tragedy of 1986. This is felt also in Euro/Dollar – the fears weigh on it.
• US Government Shutdown Averted: This was the driver for the extra strong rally on Friday. The dollar took its time with responding to this news, but it finally happened,and we have a strong dollar.
• First rate hike in two years: Indeed, the European Central Bank made a move on the rates. Trichet raised the rate to 1.25% and hinted that another moves isn’t coming in the next meeting, but won’t be ruled out. The initial reaction was bad for the Euro,as the market expected him to be more hawkish and to hint more rate hikes.
• Bailout for Portugal – The details of a bailout for Portugal are starting to emerge, and there’s a lot of talk that Portugal will be the last country to receive a bailout. Indeed, Spanish yields are lower, meaning that the market is more confident about Spain. See more about The Portuguese bailout
• Fed becoming hawkish:  After a few  recent hawkish speeches we now hear from the doves in the Federal Reserve. Dudley and Yellen are definitely in the dovish camp. We’ve heard them recently and they’ll speak again now.