EUR/USD is steady on Tuesday, as the high-flying euro continues to trade at high levels. The pair is trading in the mid-1.37 range in the European session. In economic news, ZEW Economic Sentiment releases for Germany and the Eurozone climbed to multi-year highs. In the US, today’s key event is Core CPI, with the markets expecting another weak reading for November.
Here is a quick update on the technical situation, indicators, and market sentiment that moves euro/dollar.
- EUR/USD edged higher in the Asian session, consolidating at 1.3777. The pair has retracted in the European session.
- Current range: 1.3710 to 1.3800.
Further levels in both directions:
- Below: 1.3710, 1.3675, 1.3615, 1.3525, 1.3440, 1.34, 1.3320, 1.3240, 1.3175 and 1.31.
- Above: 1.3800, 1.3832, 1.3940 and 1.4036.
- 1.3710 is providing support. 1.3675 is next.
- 1.3800 is providing weak resistance. 1.3870 follows.
- 10:00 German ZEW Economic Sentiment. Exp. 55.3, Actual 62.0 points.
- 10:00 Eurozone ZEW Economic Sentiment. Exp. 60.9, Actual 68.3 points.
- 10:00 Eurozone CPI. Exp. 0.9%, Actual 0.9%.
- 10:00 Eurozone Core CPI. Exp. 1.0%, Actual 0.9%.
- All Day – Eurogroup Meetings.
- 13:30 US Core CPI. Exp. 0.1%.
- 13:30 US CPI. Exp. 0.1%.
- 13:30 US Current Account. Exp. -101B.
- 15:00 US NAHB Housing Market Index. Exp. 55 points.
*All times are GMT
For more events and lines, see the Euro to dollar forecast.
- Eurozone, German Economic Sentiment soars: German ZEW Economic Sentiment, a key indicator which is based on a survey of institutional investors and analysts, jumped to 62.0 points in November, up from 54.6 the previous month. This easily beat the estimate of 55.3. The Eurozone ZEW Economic Sentiment followed suit, rocketing to 68.3 points, compared to 60.2 points in October. This crushed the estimate of 60.9. Meanwhile, inflation was up slightly, as Eurozone CPI and Core CPI both posted gains of 0.9%. However, this is well below the ECB target of about 2.0%, as weak inflation continues to hobble economic growth in the region.
- Will Fed press taper trigger?: All eyes are on the Federal Reserve, which meets for a two-day policy meeting starting on Tuesday. The million dollar question is whether the Fed will taper QE. Although there’s a stronger likelihood that the Fed will wait until after the new year, Bernard Bernanke’s swan song could surprise the markets if the Fed does take QE action at this week’s meeting. Currently, the Fed is purchasing $85 billion in assets every month, and a Fed taper will likely boost the US dollar against the major currencies.
- Mixed PMIs out of Europe: There was plenty of action to start off the new trading week, as the Eurozone released a host of PMI numbers. Eurozone Service and Manufacturing PMIs remained above 50, which is the separator between expansion and contraction. German Flash Manufacturing PMI climbed to 54.2 points, while the Services PMI missed the estimate, but came in at a respectable 54.0 points. French PMIs were weak, with the Manufacturing PMI dropping to 47.1 and the Services PMI coming in at 47.4 points. The euro has reacted positively, as it climbs towards the 1.38 line.
- Budget agreement passes first hurdle: There was some good news on the fiscal front late last week, as the US House of Representatives easily passed a budget deal. The agreement, which is scheduled to be voted on by the Senate this week, removes the risk of a government shutdown and reduces the deficit by a modest $23 billion. Democrats and Republicans both had criticism of the proposal, but there is general agreement in Washington that the compromise reached is a positive step which removes some of the fiscal uncertainty we’ve seen in recent months.