EUR/USD is trading at high levels as we begin the new trading week. The pair is trading in the low-1.37 range on Monday, after gaining close to 200 points last week. Eurozone releases started off the week on a sour note, as German Trade Balance slipped in November, as did Eurozone Sentix Investor Confidence. We’ll get a look German Industrial Production later in the day. Over in the US, today’s only event is a speech by FOMC Member James Bullard on monetary policy in St. Louis.
Here is a quick update on the technical situation, indicators, and market sentiment that moves euro/dollar.
EUR/USD Technical
- EUR/USD showed little movement late in the Asian session, trading just above the 1.37 line for most of the session. The pair has edged higher 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, 1.3870, 1.3940 and 1.4036.
- The pair is testing support at 1.3710. 1.3675 is next.
- The round number of 1.3800 is the next line of resistance. 1.3870 follows.
EUR/USD Fundamentals
- 7:00 German Trade Balance. Exp. 17.4B, Actual 16.8B.
- 9:30 Eurozone Sentix Investor Confidence. Exp. 10.5, Actual 8.0 points.
- 11:00 German Industrial Production. Exp. 0.8%.
- All Day – Eurogroup Meetings.
- 18:05 FOMC Member James Bullard Speaks.
*All times are GMT
For more events and lines, see the Euro to dollar forecast.
EUR/USD Sentiment
- Non-Farm Payrolls remain strong: US employment numbers continue to look strong. On Friday, Non-Farm Payrolls was almost unchanged, coming in at 203 thousand. This was well above the estimate of 180 thousand. The Unemployment Rate dropped from 7.3% to 7.0%, beating the estimate of 7.2%. The strong numbers are sure to increase the pressure on the Fed to taper QE when its meets later in December.
- Will Fed taper in December? Last week’s employment numbers were super, as Unemployment Claims, Non-Farm Payrolls and the Unemployment Rate all impressed. The Fed has said that a stronger employment picture is a prerequisite to tapering, and last week’s numbers certainly increase the possibility of the Fed taking action at its December policy meeting. Other factors also favor a December taper.
- Euro gains as ECB maintains rate: As expected, the ECB did not make reduce interest rates, which remain at the record low of 0.25%. As well, the deposit rate remains at 0.0%. After the rate decision, ECB head Mario Draghi said that the Bank would continue its accommodative policy stance and that interest rates would remain at current or lower levels for some time. He noted that there had been some discussion at the policy meeting about lowering the deposit rate. There wasn’t much new as far as projected growth for the Eurozone, with Draghi saying that the ECB forecast for 2013 remains at -0.4%, with the 2014 prediction revised slightly higher, up to 1.1% growth from 1.0%. The euro improved sharply, gaining close to one cent on Thursday.
- Unemployment Claims Drop: US employment numbers continue to show improve, as Unemployment Claims dropped for the third consecutive week. The key indicator dropped from 316 to 298 thousand, easily beating the estimate of 328 thousand. There was further good news, as GDP shot up 3.6% in Q3.
- Eurozone inflation remains low: Weak inflation continues to hobble the Eurozone, despite a record low interest rate of 0.25%. On Thursday, the ECB reduced its forecast for inflation in 2014, from 1.3% to 1.1%. This is well below the ECB’s target of 2%, and the ECB may have to take action if growth does not improve.
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