EUR/USD continues trading in a limited range as no major releases are scheduled. A relatively hawkish statement from the Bundesbank did little to strengthen the common currency and a hawkish statement from a known FOMC hawk did little for the dollar. The FOMC meeting minutes seem to be holding the markets back. Which direction will the pair take afterwards?
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 around 1.3350.
Current range: 1.3280 to 1.3350.
Further levels in both directions: EURUSD:
- Below: 1.3280, 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
- 6:00 German PPI. Exp. +0.2%, actual -0.1%.
For more events and lines, see the Euro to dollar forecast.
EUR/USD Sentiment
- Hawkish statements: The Bundesbank said that the ECB’s forward guidance doesn’t necessarily mean that the ECB will not hike rates if inflation lifts its head. This is a typical statement from the German central bank. However, there are no signs of inflationary pressure so far. The fall in German PPI demonstrates this. In the US, FOMC member Lacker did not surprise markets by supporting a gradual end to QE.
- Rising chances for Summers to head the Fed: Media reports in the US continue talking about Larry Summers as the leading candidate to lead the Federal Reserve after Bernanke. An announcement is expected during the autumn. Opinion: Fed Chair impact on USD: Summers up, Yellen down
- 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.
- Recession ends in the euro-zone, doubts remain: 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.
- Some improvement in Greece: While unemployment is horrible (around 64% of youth are without jobs), Greece reported a significant rise in tourism during June. Hopefully also July and August will see positive data.
- The Netherlands to miss deficit target: Dutch finance minister Jeroen Dijsselbloem, who also leads the Eurogroup, said that his country will not meet the EU deficit target for 2014. The weakness in the rich northern shadow casts a shadow over the zone.
- Lower volume: We are already deep into August, and trading volume has fallen. Mondays are more quiet, and things should heat up afterwards.
More:
- Opinion: Euro strength – how long will it last?
- EURUSD: Looks To Recapture The 1.3415 level – Technical analysis
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