The action continues in EUR/USD. After breaking to a new 6 month high yesterday, the pair is suffering from a “hangover” and loses the 1.3415 level. Worries about Greece are beginning to mount once again, and the markets remain nervous towards the release of the FOMC meeting minutes later in the day. Where next for EUR/USD?
Here is a quick update on the technical situation, indicators, and market sentiment that moves euro/dollar.
- Asian session: Euro/dollar traded just above 1.3415 and began falling in the European session.
Current range: 1.3350 to 1.3415.
- Below: 1.3280, 1.3255, 1.3175, 1.31, 1.3050 and 1.30.
- Above: 1.3350, 1.3415, 1.3480 and 1.3520.
- 1.3350 is the line to watch on the downside.
- 1.3415 saw a big break and immediately turned to support. It switches back to resistance..
- 14:00 US Existing Home Sales. Exp. 5.15 million. See how to trade the figure with USD/JPY.
- 18:00 US FOMC Meeting Minutes. The big event of the week.
For more events and lines, see the Euro to dollar forecast.
- Greek worries: More officials are coming out and saying that Greece might need a third bailout. The latest was EU Commissioner Olli Rehn. Greece doesn’t reject more money, but says it may require less than beforehand. Tourism is on the rise, but unemployment, especially among youngsters is extremely high. This chatter comes at a bad time for Merkel: she is facing elections on September 22nd and recently said she didn’t see a need for more aid to Greece.
- FOMC Minutes in focus: After some slow trading, markets began waking up and the rise in EUR/USD was partially a “front-running” move towards the release. The meeting saw no change in policy, but the internal debate will likely reveal a bit more about the members’ intentions towards the all important September meeting.
- 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.
- 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.
- Opinion: Euro strength – how long will it last?
- Forex Analysis: EUR/USD Advances Sharply to Six-Month High