EUR/USD April 19 – Little Movement as Euro Numbers Mixed

After taking the markets for a wild ride mid-week, EUR/USD  has settled down, and was trading in the high-1.30 range in the European session. German  inflation numbers disappointed, but the Eurozone Current Account was outstanding.  In the US, the grim news continues, as Unemployment Claims and the Philly Fed Manufacturing Index  missed their  estimates. There are  no economic releases out of the US on Friday.  

Here is a quick update on the technical situation, indicators, and market sentiment that moves euro/dollar.

EUR/USD Technical

• Asian session: Euro/dollar  edged higher, touching a high of 1.3076 and consolidating at 1.3064.  The pair  is steady in the European session.
• Current range: 1.3050 to 1.3100.

Further levels in both directions:    

• Below: 1.3050, 1.30, 1.2960, 1.2880, 1.2805, 1.2750 and 1.27.
• Above: 1.31, 1.3140, 1.3170, 1.3255, 1.3290, 1.3350 and 1.34.
• 1.31 is providing resistance. 1.3170 is  a key level.
• 1.3050 is providing weak support. This is followed by the  round number  1.3000.

Euro  steady  after mixed Eurozone, German numbers  – click on the graph to enlarge.

EUR/USD Fundamentals

• 6:00 German PPI. Exp. 0.1%. Actual -0.2%
• 8:00 Eurozone Current Account. Exp. 14.9B. Actual 16.3B
• 11:30 Deutsche Bundesbank President Jens Weidmann Speaks in Washington
• Day 1 – IMF Meetings
• Day 2 – G20 Meetings
• 16:00 US  FOMC Member  Jeremy Stein  Speaks

For more events and lines, see the Euro to dollar forecast

EUR/USD Sentiment

• Euro  roller coaster  takes a break:  The euro has settled down after some sharp movement earlier in the  week.  The  currency shot  up on Tuesday, shrugging off weak  Economic Sentiment numbers out of  Germany and the Eurozone.  On Wednesday, the   euro coughed up those gains and then some.  The markets reacted negatively to comments by  the  head of the German central bank, Jens Weidmann, that the ECB could lower rates if economic and inflation data warranted such a move. The markets were also unnerved following the release of an IMF report earlier in the week. The  report  found that  the Eurozone is the weakest part of the global economy, and called on the ECB to lower interest rates in order to boost economic growth. The IMF reduced its forecast of Eurozone growth in 2013  from 0.2% to -0.2%, and also downgraded its forecast of German growth from 0.9% to 0.6%.
• US numbers continue to flounder: What’s wrong with the US? The country’s economic releases continue to disappoint the  markets, as  this week’s key releases fell below expectations. Thursday brought more bad news, as employment and manufacturing numbers missed the mark. Unemployment Claims came in at 352 thousand, higher than the estimate of 349 thousand. The Philly Fed Manufacturing Index dropped from 2.0 points to 1.3 points,  nowhere near  the  estimate of 2.7 points. The alarm bells may not have gone off just yet, but the continuing weak numbers are raising concerns about the extent of the US recovery.
• G20 meets in Washington: The markets are keeping a close eye on the two-day G20 meeting in Washington, which wraps up on Friday.  Prior to  the meeting, US Treasury Secretary Jack Lew warned against currency devaluations,  singling out  China. Washington is also worried about stagnation in the Eurozone, and wants countries such as Germany to take steps to help the zone’s weaker members in Southern Europe, such as Spain, Cyprus and Greece. The slumping yen is also a hot topic, as many of Japan’s trading partners have seen their exports take a hit, thanks to the weak yen. The G20 often sugar coats criticism of its own members, but we could see the markets react to any statements directed at the Japanese currency.
• Italy struggles with political impasse: Remember the Italian election back in February that failed to produce a clear winner? Well, unfortunately  not much has happened since, as Italy has been in a political crisis since then. Mario Monti remains head of a caretaker government, but has been unable to continue with badly-needed economic reforms due to the political impasse. Monti and center-left leader Pier Luigi Bersani are hoping to reach agreement choosing a successor to President Giorgio Napolitano, who will step down in May. The crisis in the Eurozone’s third largest economy could undermine the Eurozone, and the markets are hoping that the choosing of a new president will be the first step in establishing a new government.