EUR/USD is recovering and holding on to the 1.33 level, after a weak start to the week. Optimism from Germany keeps the common currency higher, even if this isn’t shared by all euro-zone countries. US retail sales will attract attention later on and will contribute to the endless “to taper or not to taper” debate.
Here is a quick update on the technical situation, indicators, and market sentiment that moves euro/dollar.
- Asian session: Euro/dollar found a bottom at 1.3280 and traded quietly since then. It rose again after the German data..
Current range: 1.33 to 1.3350.
- Below: 1.33, 1.3255, 1.3175, 1.31, 1.3050 and 1.30.
- Above: 1.33, 1.3350, 1.3415, 1.3480 and 1.3520.
- 1.3255 is providing weak support is the pair drops below 1.3280.
- 1.3415, the June peak is now strong resistance just above the round 1.34.
- 6:00 Final German CPI. Exp. +0.5%, actual +0.5%.
- 6:00 German WPI. Exp. +0.2%, actual -0.3%.
- 9:00 German ZEW Economic Sentiment. Exp. 40.3, actual 42 points.
- 9:00 German ZEW Current Situation. Exp. 12, actual +18.3 points.
- 9:00 Euro-zone ZEW Economic Sentiment. Exp. 37.4, actual 44 points.
- 9:00 Euro-zone industrial production. Exp. +1.1%, actual +0.7%.
- 11:30 US NFIB Small Business Index. Exp. 95.4 points.
- 12:30 US Retail sales. Exp. +0.2%.
- 12:30 US Core retail sales. Exp. +0.4%.
- 12:30 US Import prices. Exp. +0.9%.
- 14:00 US Business Inventories. Exp. +0.3%.
For more events and lines, see the Euro to dollar forecast.
- Strong German data: The better than expected ZEW Sentiment and its accompanying numbers join the strong industrial output numbers last week and point to solid German growth. Expectations are now high for the GDP release on Wednesday. See how to trade the German GDP with EUR/USD.
- Septaper seems closer: After the weak Non-Farm Payrolls, we got quite a few hawkish comments from FOMC members as well as positive data. This hasn’t helped the dollar at first, but now we see some improvement. The fresh data will have an important impact on the FOMC decision in September: to taper bond buys or not. Perhaps it is already priced in.
- Greek specter: According to a report in Der Spiegel quoting the German Bundesbank, Greece will need a third bailout program in 2014. This is hardly surprising given the IMF warnings and the 64% youth unemployment in the debt struck country, but the timing is sensitive: elections are coming in Germany on September 22nd.
- Lower volume: We are already deep into August, and trading volume has fallen. Adding the light calendar, movements could be somewhat surprising.
More technical analysis:
- EURUSD: Bearish Reversal Is Unfolding-Elliott Wave Analysis