EUR/USD secured the support line and is now advancing towards the next strong line of resistance. Stronger inflation figures in Europe and dovish statements in the US enable this move. We have a very busy day ahead. Here’s a quick update on technicals, fundamentals and sentiment currently moving the markets.
EUR/USD Technicals
- Asian session: Euro/Dollar dropped to support at 1.4450 and bounced from there. The fresh rise came in the European session..
- Current range – 1.4450 – 1.4580
- 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 switched once again to support, and proved to be quite strong..
- The pair is making gradual steps towards 1.4580, which is the highest level in 15 months.
Euro/Dollar on high support – click on the graph to enlarge.
EUR/USD Fundamentals –
- 5:30 French CPI. Exp. +0.6%. Actual +0.8%. Inflation is on the rise.
- 6:00 German WPI (Wholesale Price Index). Exp. +1.3%. Actual +1.3%. Within expectations, but expectations were high anyway.
- 9:00 European Industrial Production. Exp. +0.8%.
- 12:30 US Retail Sales. Exp. +0.6%. Core sales exp. +0.7%.
- 18:00 US Beige Book.
- 21:00 ECB member Axel Weber talks.
* All times are GMT.
For more events later in the week, see the EUR/USD forecast
EUR/USD Sentiment
- More rate hikes in Europe?: The fresh inflation data from Europe suggests further tightening. 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.
- Fed leaning towards the doves: After a few recent hawkish speecheswe now hear from the doves in the Federal Reserve. Dudley and Yellen are definitely in the dovish camp. This weakens the US dollar across the board.
- Profit Taking: EUR/USD made a huge rally last week. It took a break, especially as commodity prices fell. But it’s not resuming the uptrend.
- Default for Greece?: There’s lots of speculation about a default for the small country. It’s currently being denied and ignored. When it eventually happens, it could hurt the Euro.
- 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
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