EUR/USD is holding its ground on the high range it jumped to as the dollar sold off together with the US stock markets. Somewhat weak European data did little to shake the common currency, and the week is set to close with another look at the US consumer. Can the dollar recover?
Here is a quick update on the technical situation, indicators, and market sentiment that moves euro/dollar.
EUR/USD Technical
- Asian session: Euro/dollar traded quietly above 1.33 after the big jump.
Current range: 1.33 to 1.3350.
Further levels in both directions: EURUSD:
- Below: 1.33, 1.3255, 1.3175, 1.31, 1.3050 and 1.30.
- Above: 1.3350, 1.3415, 1.3480 and 1.3520.
- 1.33 now switches to support.
- 1.3415, the June peak is now strong resistance just above the round 1.34.
EUR/USD Fundamentals
- 8:00 Euro-zone Current Account. Exp. 21.2 billion, actual 16.9 billion.
- 9:00 Euro-zone CPI: Exp. 1.6%, actual 1.6%. Core CPI, exp. 1.1%, actual 1.1%.
- 9:00 Euro-zone trade balance. Exp. 15.3 billion, actual 14.9 billion.
- 12:30 US Building permits. Exp. 0.95 million.
- 12:30 US Housing Starts. Exp. 0.91 million.
- 12:30 US Non-Farm Productivity (1st release). Exp. 0.5%.
- 12:30 US Unit Labor Costs (1st release). Exp. 1.4%.
- 13:55 UoM Consumer Sentiment. Exp. 85.6 points. See how to trade this event with USD/JPY.
For more events and lines, see the Euro to dollar forecast.
EUR/USD Sentiment
- Dollar meltdown: What exactly happened? The Philly Fed Index came out below expectations, but other figures were better. This is one theory: fear of global slowdown due to tapering strengthened the yen against the dollar and this move got out of control due to triggering of Stop Loss orders. This in turn, triggered a general dollar sell off.
- Important data Septaper supportive: Inflation figures came out as expected and pointed to 2% YoY in CPI and 1.7% in core CPI. This should be enough for the Fed. In addition, jobless claims fell to a new multi-year low of 320K. Excellent pro-dollar news. However, tapering remains a close call for both the Fed and the markets and the follow up after the Philly number was totally different.
- Strong core weak periphery: The euro isn’t riding on the good data, and for a reason. 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.
- Crisis in Egypt pushing oil higher: The bloodshed in Cairo and in other Egyptian cities could escalate to a shut down of the Suez Canal and this is a critical route for oil shipments. Militants in the Sinai Peninsula might act to shut down the canal.
- Lower volume: We are already deep into August, and trading volume has fallen. Friday is especially volatile.
More technical analysis:
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