EUR/USD fell sharply in the wake of the excellent US Non-Farm Payrolls report. However, the euro managed to end the week in positive ground against the dollar, something that wasn’t shared with other currencies. The common currency had rallied strongly on Draghi’s lack of urgency to front-load bond buys and his relaxed approach to volatility. And thus, the pair maintained some of its gains.
And in the wake of the new week, EUR/USD finds reasons to climb back up. Here are the reasons and lines to watch:
- Strong German data: German trade balance came out at a surplus of 22.3 billion, better than 18.1 expected and 19.3 billion beforehand. This keeps the euro bid. Also industrial output in the continent’s locomotive came out beyond expectations at 0.9%, significantly higher than 0.6% predicted.
- Reported comment by Obama: According to a French official at the G7 summit in Germany, US president Obama said that the strong dollar is a problem. The comment sent the dollar lower, even if there is no confirmation. The president rarely mentions currencies and the official US position is a “strong dollar policy”. In addition, the US complains about other countries’ currency manipulation. So, while avoiding any public comment, this report shows that the US is worried about the currency, assuming the report is correct.
- Greek calm: Last week ended with a defiant speech by Greek PM Alexis Tsipras that followed Greece’s decision to defer the IMF payment – a clear escalation of the Greek crisis. But now, there are reports about more talks scheduled for tomorrow and for Wednesday, and more reports from the Greek side about talks being close to conclusion. How will this end? That’s an open question. But for now, markets are calm.
EUR/USD is now trading within a range: 1.1125 to 1.1.90. This is one range above the the previous 1.1050 to 1.1125.
Further resistance awaits at 1.1220 and 1.1275. Below 1.1050, which is a tough line, the round level of 1.10 awaits.
More: 6 Reasons To Fade EUR/USD Strength – BNPP
Here is how it looks in the EUR/USD chart:
In this week’s podcast, we explain why EUR rallied on Draghi, what’s next, discuss oil and gas, run through the Plus500 story and preview next week’s events.
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