EUR/USD is steady, as the pair was trading just above the 1.33 line. The pair was supported by excellent economic sentiment numbers out of the Eurozone and Germany. In the US, Existing Home Sales disappointed, falling well below market expectations. We could be in for a quiet day on Wednesday, with only two minor releases on the schedule.
EUR/USD Technical
- Asian session: Euro/dollar edged lower, slipping to a low of 1.3290. The pair then recovered slightly, consolidating at 1.3302. The pair continues to test the 1.33 line in the European session.
- Current range: 1.3290 to 1.3360.
Further levels in both directions: 
- Below: 1.3290, 1.3255, 1.3170, 1.3130, 1.3110, 1,3030, 1.30, 1.2960, 1.28, 1.2750, 1.2690, 1.2624 and 1.2590.
- Above: 1.3360, 1.34, 1.3480, 1.36, 1.3750 and 1.3838.
- 1.3290 is providing weak support, and could see some activity today. 1.3255 is stronger.
- On the upside, 1.3360 is the next line of resistance.
Euro/dollar steady after strong Eurozone, German data – click on the graph to enlarge.
EUR/USD Fundamentals
- 14:00 US HPI. Exp. 0.7%.
- 15:00 Eurozone Consumer Confidence. Exp. -26 points.
For more events and lines, see the Euro to dollar forecast
EUR/USD Sentiment
- German, Eurozone Economic Sentiment numbers shine: Experts have been saying that the Eurozone economy will remain subdued for most of 2013, but the economic sentiment indicators clearly weren’t paying attention. Both indicators crushed the estimates, and hit their highest levels since May 2010. The German data was particularly welcome, as the Eurozone’s largest economy has looked sluggish of late, and a sustained recovery will depend on Germany getting back on track. If these positive numbers are reflected in other releases, we could see the euro gain more ground.
- Greece receives more bailout funds: At a meeting on Monday in Brussels, the Eurogroup of Eurozone Finance Ministers approved the next installment of bailout funds for Greece, in the amount of 9.2 billion euros. This tranche is made up of EUR 7.2 billion in bonds, to recapitalize Greek banks, and EUR 2 billion in cash for government expenses. The decision boosted market sentiment, as the move was seen as a vote of confidence by the ECB in the ability of Greece to carry on with its economic restructuring program.
- Eurogroup looks to aid banks directly: The Eurogroup has commenced discussions on how to best utilize the European Stability Mechanism, the Eurozone’s emergency bailout fund. The Eurogroup is taking a close look at direct bank recapitalization, whereby banks would borrow directly from the ESM. This is intended to replace the process whereby governments simply borrow more funds to bolster their ailing banks. As with most major issues affecting the Eurozone, there are deep divisions on this issue. The front-line members who are being touted for further aid include Spain, Cyprus and Greece.
- New Leadership for Eurogroup: Jean-Claude Juncker, who headed the Eurogroup of finance ministers for the past eight years, stepped down on Monday. Juncker, a staunch defender of the euro and of European unity, presided over the global financial crisis in 2008, and the more recently, the Eurozone debt crisis, which threatened to destroy the euro. He will be replaced by Jeroen Dijsselbloem, the finance minister of the Netherlands. There was considerable jockeying between France and Germany as to who would be Juncker’s successor, and Dijsselbloem was considered a compromise candidate. The new head will certainly have his work cut out for him in Brussels, as he only became the Dutch finance minister in November.
- Congress prepares for budget talks: In Washington, there was a new development in budget negotiations, which have been stalled due to sharp disagreements between the Republicans and Democrats. The Republicans have announced that they will table a proposal in Congress which would extend the debt ceiling until April 15. This would allow the U.S. government to borrow enough money to keep it fully operating for the next three months until the sides can reach an agreement. The two sides took a short breather to celebrate President Obama’s inauguration on Monday. With the parties far apart on the issue of spending cuts and how to deal with the staggering US debt, we can expect more fireworks on Capitol Hill before the spring thaw.
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