Euro dollar was down, after the Eurozone Investment Confidence Index plummeted. The dollar was also helped by a robust Chinese trade balance surplus, which took the markets by surprise. However, recent weak employment numbers in the US remain a source of concern. Are theses employment figures just a temporary blip, or an indication that the US economy may be slowing down? We’ll know more after further US economic indicators are released later this week, especially Unemployment Claims, Trade Balance and CPI.
Here’s an update on technicals, fundamentals and what’s going on in the markets.
EUR/USD Technicals
- Asian session: EUR/USD hit a high of 1.3144 during the Asian trading session; the pair consolidated at 1.3118. The pair has dropped slightly in the European session, trading at 1.3090.
- Current range: 1.3060 to 1.3150.
- Further levels in both directions: Below: 1.2945, 1.2873, 1.2760, 1.2660 and 1.2623.
- Above: 1.3212, 1.33, 1.3360, 1.3437, 1.3486, 1.3550 and 1.3615.
- 1.3080 proved to be a distinctive line separating ranges – it has again been broken on the upside, and is providing weak support.
- 1.30 used to be a round number without technical strength, but the recent challenge showed it is a serious barrier, and is providing support to EUR/USD.
Euro/Dollar is down following weak Euro-zone data – click on the graph to enlarge.
EUR/USD Fundamentals
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6:00 German Trade Balance. Exp. 13.6B. Actual 13.6B.
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6:45 French Industrial Production. Exp. 0.3%. Actual 0.2%.
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8:30 Euro-zone Sentix Investor Confidence. Exp. -7.7.
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14:00 US IBD/TIPP Economic Optimism. Exp. 49.1.
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14:00 US Wholesale Inventories Exp. 0.5%.
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16:45 FOMC Member Lockhart Speaks.
For more events later in the week, see the Euro to dollar forecast
EUR/USD Sentiment
- US Employment Numbers Disappoint: US Non-Farm Employment Change was a major disappointment, as only 120K non-farm jobs were created in March. This was well below the market forecast of a gain of 207K, and the lowest figures since December 2011. On a slightly positive note, the US unemployment rate inched down in March, to 8.2%. Given this mixed bag, the markets will be carefully watching the US Unemployment Claims, which will be released later in the week.
- Spanish worries: Spain had a very disappointing bond auction, reversing the success it had earlier in the year, when the LTRO was in play. This joined a minus comment by Citigroup chief economist said that the chance of a Spanish default is now higher.. Europe remains very fragile.
- Greek foreign law bond deadline extended: Thought that the Greece will be out of the limelight for long? Think again. The holders of foreign law (mostly English-law) bonds refuse to accept the bond swap, and there’s no way Greece can force them to. The Hellenic Republic extended the deadline to April 20th, but the actual deadline is May 15th, when it needs to pay out. Any additional payment will stress the Greek government during an election period, and will complicate the tight calculations for its recovery. Greece didn’t declare bankruptcy on March 23rd, but this danger looms during the long Easter holiday, as well as every weekend until May 15th.
- Chinese Trade Balance Jumps: Chinese Trade Balance shot up to 5.4B in March. This respectable surplus was well above the market forecast of a 2.2B deficit. Given the immense economic importance of the Asian giant, any unexpected figures of important economic data can affect the direction of the major currencies.
- FOMC Dampens Likelihood of Interest Rate Hike: The fallout continues in the currency markets following the release of the FOMC March meeting minutes indicated that the Fed will not launch a further round of QE. The euro has fallen over 1% against the dollar since the FOMC release.
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