EUR/USD made a move above the all-important 1.33 level, but yet again, didn’t go to far and eventually returned to range. A hawkish comment from an FOMC dove as well as strong data in the US limited any upside moves. But can the pair also fall below the current range?
Here is a quick update on the technical situation, indicators, and market sentiment that moves euro/dollar.
EUR/USD Technical
- Asian session: Euro/dollar remained above 1.33 for most of the time, but couldn’t hold to these gains.
Current range: 1.3255 to 1.33.
Further levels in both directions: 
- Below: 1.3255, 1.3175, 1.31, 1.3050, 1.30, 1.2940, 1.2890 and 1.2840, 1.28 and 1.2750.
- Above: 1.33, 1.3350, 1.34, 1.3480 and 1.3520.
- 1.3255 is providing weak support. 1.31 is stronger.
- After yet another false break above 1.33, the line still remains very strong.
EUR/USD Fundamentals
- 6:45 French Trade Balance. Exp. -5 billion. Actual -4.4 billion.
- 10:00 German Industrial Production. Exp. +0.3%.
- 19:00 US Consumer Credit. Exp. 15.3 billion.
For more events and lines, see the Euro to dollar forecast.
EUR/USD Sentiment
- More encouraging US numbers: A sometimes overlooked jobs indicators, job openings (JOLTS) has exceeded expectation and got very close to 4 million. This is one of Bernanke’s favorite indicators. In addition, the US trade deficit is also better than expected, and this will upgrade the Q2 GDP. However, the weak Non-Farm Payrolls report from Friday is still weighing on the dollar, as it leaves the QE tapering question quite open.
- Evans shows hawkishness: A usually dovish FOMC member, Charles Evans, made remarks showing that QE tapering is certainly on the cards for September. This is certainly dollar positive. This comes after the Fed made no real policy changes and after Bernanke said that the Fed is not on a “preset course”.
- A slower downfall – no strong growth yet: The euro-zone’s third largest contracted for the 8th consecutive quarter, but at least the level of contraction was lower: only 0.2% instead of 0.4%. Signs from Germany and France were positive, but there is doubt that the euro-zone as a whole has returned to growth. German industrial production will provide an important peek.
- Downward bias from the ECB: While Mario Draghi was relatively upbeat and acknowledged the green shoots in Europe, the bias certainly remains dovish, and yet another ECB member reminded us that rates could go down from here, and that the ECB still “has more ammunition”.
On Thursday: See how to trade the US jobless claims with EUR/USD.
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