EUR/USD July 2 – Little Change as Spanish Unemployment

EUR/USD  started the new trading week on the right foot, posting gains against the dollar on Monday. EUR/USD  was trading in the mid-1.3000 range in  Tuesday’s European session. The week has started with some positive employment numbers out of the Eurozone. On Monday, the Eurozone Unemployment Rate dipped lower, and this was followed by a very sharp drop in the Spanish Unemployment Change on Tuesday.  In the US,  there are no major releases, and today’s highlight is Factory Orders.

Here is a quick update on the technical situation, indicators, and market sentiment that moves euro/dollar.

EUR/USD Technical

• Asian session: Euro/dollar was steady, touching a  high of 1.3071  and consolidating at 1.3060. The pair  is unchanged  in  the  European session.

Current range: 1.3050 – 1.3100.

Further levels in both directions:  

• Below: 1.3050, 1.30, 1.2940, 1.2890, 1.2840, 1.28, 1.2750  and  1.27.
• Above: 1.31, 1.3160, 1.32, 1.3255, 1.3350, 1.34, 1.3434 and  1.3480.
• 1.3050 is facing pressure on the downside. 1.3000 is next.
• 1.3100 is providing weak resistance. This is followed by 1.3160.

Euro  trading  in  mid-1.30 range after  positive  Eurozone, Spanish  employment  numbers  – click on the graph to enlarge.

EUR/USD Fundamentals

• 7:00  Spanish Unemployment Change. Exp.  -83.5K. Actual -127.2K.
• 9:00  Eurozone PPI. Exp. -0.2%. Actual -0.3%.
• 14:00 US  Factory Orders.  Exp.  0.2%.
• 14:00 US IBD/TIPP Economic Optimism. Exp. 49.3 points.
• All Day – US Total Vehicle Sales. Exp. 15.3M.
• 16:30 FOMC Member  William  Dudley  Speaks.
• 21:45 FOMC Member Jerome Powell Speaks.

For more events and lines, see the  Euro to dollar forecast.

EUR/USD Sentiment

• Eurozone Manufacturing PMIs point higher: There was good news to start the week as Eurozone Manufacturing PMIs moved higher. Spanish Manufacturing PMI has been moving upwards recently, and  reached the 50.0 level for the first time since May 2011. A reading above 50 indicates expansion. Italian and Eurozone Manufacturing PMIs also beat their estimates, but remain under the 50 level. If the week continues with more positive releases out of the Eurozone, we could see the euro show some improvement. There was some good news on the employment front as well, as the Eurozone Unemployment Rate dropped to 12.1% from 12.2%.
• Spanish Unemployment Numbers Plummet: Spanish Unemployment Change was outstanding, dropping by 127.2 thousand. This easily beat  the estimate of -83.5 thousand. The markets had expected a strong seasonal release, but  this  drop clearly beat all expectations. Let’s not forget that  the  unemployment rate  in  Spain remains around 27%,  which continues to weigh heavily on the economy.  Still, good news is always welcome, and the unemployment numbers come on the heels of a positive Spanish Manufacturing PMI. Spanish Services PMI will be released on Wednesday – will the upward trend continue?
• Global growth downgraded: Global economic growth has not been particularly strong, and  has now  been  downgraded by the HSBC. Global growth was  revised from 2.8% to 2.0% in 2013, and from  3.1% to 2.6% in 2014.  In its report, HSBC said that it had lowered its forecast due to the US Federal Reserve decision to cut QE, as well as a sharp slowdown in China and other emerging   countries such as India and Brazil. The report revised China’s GDP from 8.2% to 7.4% for 2013 and from 8.4%. to 7.4% for next year. Weaker global growth  will  make it even more difficult for the  Eurozone  economy to get back on its feet and emerge from a rough recession.
• Greek bailout in trouble?: The Greek bailout is back in the news,  as  officials in the Eurozone are voicing dissatisfaction with the lack of progress by Athens in implementing the bailout conditions.  The next installment  of  bailout  funds amounts to some EUR 8.1 billion, and is scheduled for delivery in early July. However, the Eurozone feels that Greece is  lagging behind in restructuring its public sector,  such as tax  collection and health care services. Greece has been given three days to assure its creditors that it is keeping its end of the bargain, or the bailout funds could be withheld. Eurozone financial ministers meet on July 8,  and the  Greek bailout  will be  high on the agenda.