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EUR/USD continues to lose ground, as markets jitters increase over a likely strike by the US against Syria. The pair crashed  through the 1.33 line early on Thursday, and is trading in the mid-1.32 range in the European session.  Looking at economic releases, Thursday will be busy. German Unemployment Change  was surprisingly  weak, posting a three-month  high.  German Preliminary CPI will be released later in the day. Over in the US, there are two market-movers being released  – Preliminary GDP and Unemployment Claims.  

Here is a quick update on the technical situation, indicators, and market sentiment that moves euro/dollar.

EUR/USD Technical

  • In the Asian session, EUR/USD  dropped sharply, falling below the 1.33 line and touching a  low of  of 1.3284.  The pair  consolidated at 1.3288.  EUR/USD continues to lose ground in  the European session.

Current range: 1.3240 to 1.33.

Further levels in both directions:   EUR USD Daily Forecast Aug29th

  • Below: 1.3240, 1.3175, 1.31, 1.3050, 1.30 and 1.2940.
  • Above: 1.33, 1.3350, 1.3415, 1.3450, 1.3520, 1.3590 and 1.37.
  • 1.3240 is providing weak support and could be tested as the euro continues to weaken. 1.3175 is next.
  • 1.3300  has reverted to a resistance line. 1.3350 follows.

EUR/USD Fundamentals

  • All Day: German Preliminary CPI. Exp. 0.2%.
  • 7:55  German Unemployment Change. Exp. 7K, actual  -5K.
  • 8:10 Eurozone Retail PMI. Exp. 50.3 points.
  • Tentative:  Italian 10-year Bond Auction.
  • 12:30 US Preliminary  GDP. Exp. 2.2%.
  • 12:30 US Unemployment Claims. Exp. 330K.
  • 12:30 US Preliminary GDP Price Index. Exp. 0.7%.
  • 12:50 US FOMC Member James Bullard Speaks.
  • 14:30 US Natural Gas Storage. Exp. 65B.
  • 16:00 German Buba President Jens Weidmann Speaks.
  • 23:45  US FOMC Member James Bullard Speaks.

For more events and lines, see the  Euro to dollar forecast.

EUR/USD Sentiment

  • Euro slides as Mid-East tensions rise: The  markets are  reacting nervously  over a likely  US  strike against Syria, after a chemical attack in the war-torn country killed  hundreds of civilians.  There are fears that a  US  attack could elicit a response from Syria or even Iran, so we could continue to see volatility  in the markets. There is a report that the US could strike on the weekend, which would reduce market instability. Meanwhile, the euro has taken a hit and has lost  close to a cent  since early Wednesday, as nervous investors move  over  to the safe-haven US dollar.  
  • US housing data  falters, but dollar stays strong:  US  releases  continue  to zigzag this week, as Pending  Home Sales  looked weak. The key housing indicator posted its second straight decline, dropping 1.3% in August. This was well  short of the market estimate of 0.2%. US manufacturing  releases started off the week with sharp declines, although consumer confidence looked good. The dollar has remained strong despite the mixed data, thanks to the crisis over Syria and market speculation over QE tapering.
  • Mixed  numbers out of Germany: German data continues to be a mixed bag. On Thursday, Unemployment Change jumped from -7 thousand in July to 7 thousand in August. The markets had expected another decline of -5K. German  Ifo  Business Climate started the week on a positive note, posting its fourth consecutive gain and climbing to its highest level  in over a year. However, GfK German Consumer Climate  could not keep up,  as it  dropped  slightly from  7.0  to 6.9 points, missing the estimate of  7.1 points.  Last month’s reading of 7.0 was a multi-year high, so the slight drop is unlikely to be of great concern to the markets. German consumers continue to spend, but are worried about inflation. National elections are just a few weeks away, and  the economy promises to be the central issue of the campaign as Chancellor Angela Merkel seeks a third straight term in office.
  • Fed split over QE tapering timing: The Federal Reserve has kept mum about when it might taper QE, but the recent Jackson Hole summit provided a glimpse of the divisions in the Fed as to when it  might act. Fed  chair Bernard Bernanke was a no-show at the  summit, giving other  policymakers  an opportunity to  express their views on QE. Dennis Lockhart, head of  the Atlanta Fed, said that tapering could start in September, but only if  US data justified such a move.  There was a more hawkish  statement from James Bullard, head of the St. Louis Fed. Bullard said that there was no need  for the Fed to rush  into QE tapering.  Bullard will make two appearances on Thursday, so we could see some reaction from the markets to his remarks. Meanwhile, the uncertainty over QE tapering has boosted the US dollar, raised the yields on US treasury bonds and  led nervous investors to pull billions of dollars out of emerging markets. With September just around the corner,  we could see strong volatility in the markets as speculation over QE heats up.
  • Greece wants more aid, but no strings attached, please:  Greece has already received two bailouts from the troika, amounting  to some 240 billion euros. Despite this massive infusion of funds, the country’s economy is still in difficult straits,  and there is talk of a third bailout.  On Sunday, Greek finance minister Yannis Stournaras said that Greece was looking for another 11 billion euros in aid, but would not adopt any austerity measures in return. German Finance Minister Wolfgang Schaeuble said  that the estimate of 11 billion euros was “not completely unrealistic”.  However, the German government is unlikely to rubber-stamp the request, given that elections in Germany are only a few weeks away, and bailout packages to struggling European countries will not win the government any votes.