EUR/USD managed to recover back to the top of the range, riding on the sell off of the dollar, a move that looks like a necessary correction. A busy day awaits traders on both sides of the Atlantic with German inflation numbers and the second estimate of US GDP. Will EUR/USD break higher or could it bounce back down from here?
Here is a quick update on what’s moving the pair.
- EUR/USD recovered and touched the top of the range.
- Current range: 1.3175 to 1.3220.
Further levels in both directions:
- Below: 1.3175, 1.3150, 1.31 and 1.30.
- Above: 1.3220, 1.3295 and 1.3333
- 1.3175 is and old line but it proved strong.
- 1.3220 is the close on Friday.
EUR/USD Fundamentals
- 7:00 Spanish Flash CPI. Exp. -0.6%, actual -0.5%. Spain digs deeper into deflation.
- 7:00 Final Spanish GDP. Exp. +0.6%, actual +0.6%.
- 7:55 German Unemployment Change. Exp. -6K.
- 8:00 Euro-zone M3 Money Supply. Exp. +1.5%.
- 8:00 Euro-zone Private Loans. Exp. -1.5%.
- 12:00 German CPI. Exp. 0% m/m, +0.8% y/y.
- 12:30 US GDP, second estimate. Exp. 3.9%.
- 12:30 US jobless claims. Exp. +299K.
- 14:00 US pending home sales. Exp. -0.6%.
*All times are GMT.
For more events and lines, see the Euro to dollar forecast.
EUR/USD Sentiment
- Inflation critical for QE now: A report coming out of Reuters yesterday said that QE in September is still not a done deal in the euro-zone, and that a lot depends on August’s inflation data. So, the German release today and the all European release tomorrow (see how to trade it with EUR/USD) are even more important. Nevertheless, even if it is pushed back, deflation expectations are well anchored and ECB action is imminent.
- Reminder of strong US growth?: The US surprised with announcing an annualized growth rate of 4% in the first read. No big change is officially expected now, but this week’s durable goods orders could result in an upgrade. Also of note is the publication of jobless claims, which are also expected to show an ongoing recovery.
- Jackson Hole fallout: Janet Yellen did her best not to rock the boat, and the lack of dovishness was dollar positive, following the trend seen after the not-too-dovish FOMC minutes. ECB president Mario Draghi certainly left the door open for more action, and QE certainly seem on the cards. He also asked governments to do more. This triggered the weekend gap which was never closed.
- Mixed news on Ukraine:: The Russian and Ukrainian presidents met in Minsk and sent a more optimistic message. However, it seems clear that Russian forces have invaded Ukraine. At the moment, there is a feeling that despite the atrocities, the world is trying to contain the situation..
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