EUR/USD is holding above the 1.3255 line but not going very far. Germany and France both posted strong GDP growth, and they pulled the euro-zone out of its 6 quarter recession. However, the US dollar remains strong and weakened only on soft PPI. While the euro-zone is out of recession, it isn’t out of the woods.
Here is a quick update on the technical situation, indicators, and market sentiment that moves euro/dollar.
- Asian session: Euro/dollar couldn’t break above 1.33 and eventually fell. to 1.3238 before climbing back above 1.3255.
Current range: 1.3255 to 1.3300.
- Below: 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. We’ve already seen it dip to lower ground.
- 1.3415, the June peak is now strong resistance just above the round 1.34.
- 5:30 French GDP. Exp. +0.1%, actual +0.5%. Great news helped the euro.
- 6:00 German GDP. Ep. +0.6%, actual +0.7%.
- 6:45 French Non-Farm Payrolls. Exp. 0%. actual: -0.2%.
- 9:00 Euro-zone GDP. Exp. +0.2%, actual +0.3%.
- 12:30 US PPI. Exp.+0.2, actual: +0.1%. Core PPI, exp. +0.4%, actual 0%.
For more events and lines, see the Euro to dollar forecast.
- Strong core weak periphery: Germany and France lead the euro-zone together once again. The news from France is especially encouraging. However, Italy and Spain are still in recession. Can this imbalance continue for a long time? Here are 4 reasons why the euro-zone is out of recession, but not out of the woods.
- Septaper could depend more on inflation: President of the Atlanta Fed, Denis Lockhart, said something along the lines of “employment really needs to be terrible to move the tapering decision”. This is dollar positive. However, as we’ve seen previously, Bullard is worried about disinflation. The weak PPI numbers triggered a weaker dollar, even though this is a second tier figure. CPI is now in the limelight.
- 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