Euro dollar moved up slightly yesterday (April 10th), but investors remain wary about the Euro. There is continuing conern about the financial crisis in the Euro-zone, particularly the financial crisis in Spain. These worries were underscored by the disastrous Investor Confidence indicator, which dropped to -14.7. The Euro managed to recover from these poor figures, but further weak data out of the Euro-zone could spell trouble for the continental currency. There are several releases in the US today, with the Federal Budget Balance being of the most interest – the markets are predicting some improvement after a very poor showing in March.
Here’s an update on technicals, fundamentals and what’s going on in the markets.
EUR/USD Technicals
- Asian session: EUR/USD had a quiet overnight session. The pair hit a high of 1.309 during the Asian trading session, and consolidated just above the 1.31 level, at 1.3102. The pair is unchanged in the European session, trading at 1.317.
- Current range: 1.3050 to 1.3140.
- 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. It could be tested on a downswing by EUR/USD.
- 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 slightly up despite fresh concerns by investors – click on the graph to enlarge.
EUR/USD Fundamentals
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6:00 German WPI. Exp. 0.9%.
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12:30 US Import Prices. Exp. 0.8%.
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14:30 US Crude Oil Inventories. Exp. 2.1M.
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18:00 US Beige Book
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21:30 US Federal Budget Balance 202.5B.
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 on Thursday.
- Spanish worries: After a very disappointing bond auction, there are fresh concerns that Spain will be unable to cut its budget deficit to 3% of GDP, despite government assurances. 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 Numbers Surprise Markets: Chinese Trade Balance shot up to 5.4B in March. This respectable surplus was well above the market forecast of a 2.2B deficit. These figures came on the heels of the Chinese inflation data, which was aslo higher than expected. 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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