EUR/USD is feeling comfortable on higher ground towards the end of the trading week. The mixed US data released yesterday did little to shake the pair. And today, we have only second tier US data. Once again, it is “no news is good news” for the common currency. Will members of the ECB try to talk down the currency towards the end of the week?
Here is a quick update on the technical situation, indicators, and market sentiment that moves euro/dollar.
EUR/USD Technical
- EUR/USD traded in a narrow range during the Asian session, just under 1.3830..
Current range: 1.3830 to 1.3894.
Further levels in both directions:
- Below: 1.3894, 1.38, 1.3740, 1.37, 1.3650 and 1.3580.
- Above: 1.3830, 1.3895, 1.3964 and 1.40.
- On the upside, the pair is testing resistance at 1.3830. The next resistance line is 1.3895.
- 1.38 is a weak support level. 1.3740 is stronger.
EUR/USD Fundamentals
- 13:00 Belgian NBB Business Climate. Exp. -2.3 points.
- 13:45 US Markit Flash Services PMI. Exp. 56.2 points.
- 13:55 Revised US Consumer Sentiment. Exp. 83.2 points.
*All times are GMT
For more events and lines, see the Euro to dollar forecast.
EUR/USD Sentiment
- Mixed US data: Mixed signals from the US economy continued also on Thursday with durable goods orders beating expectations while jobless claims disappointed. This joins previous figures which haven’t been able to confirm a spring bounce in the US economy. Winter storms still affected the US in early March, so this month was not really a “clean” one. Next week’s data for April and the all-important NFP will stand out.
- Draghi only temporarily drags down the euro: For the second time, Draghi tied between the value of the euro and future monetary policy. This mention comes as the euro remains firm not only against the dollar but also against the Chinese yuan which is depreciating. EUR/CNY is at the highest since 2011.
- Tension growing towards fresh inflation data: With the euro-zone recovery still struggling and a strong exchange rate, there is a danger of deflation. Recent ECB speakers have hyped up expectations for the April 30th release of the flash euro-zone CPI estimate for April. After headline CPI dropped to 0.5% and core inflation to 0.7%, both are expected to rise. One of the reasons for a rise is the shift in the dates of the Easter holiday from last year to this one.
- German Business Confidence Climbs: German Ifo Business Climate continues to look solid. The key indicator improved to 111.2 points in March, beating the estimate of 110.5. The indicator has been above the 110 level throughout 2014, indicating strong optimism in the business sector with regard to the German economy. Key German data can have a strong impact on the movement of EUR/USD, as Germany is the Eurozone’s largest and most important economy.
- Ukraine crisis deepens: The markets haven’t reacted to events in Ukraine so far, but that could change if the violence in the east of the country worsens. Russian President Vladimir Putin has threatened to act on his “right” to invade Ukraine, and has also given the country an ultimatum regarding its gas debt. The gas supply from Russia to western Europe is in danger, and if the situation spills out of control, we could see a sharp response from the markets. The US is considering more sanctions and Europe seems reluctant.
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