EUR/USD begins the new trading week with fresh falls, below the support line that held it on Friday. Weak German industrial production is joined by fresh talk about an earlier rate hike than earlier thought. Can we see an eventual attack on 1.35?
Here is a quick update on what’s moving the pair.
- EUR/USD traded steadily in the Asian session just above the .3585 line and is now extending the falls.
- Current range: 1.35 to 1.3585.
Further levels in both directions:
- Below: 1.3550, 1.35, 1.3450, and 1.34.
- Above: 1.3585, 1.3610, 1.3650, 1.3677, 1.37 and 1.3740.
- 1.3585 now switches to immediate resistance, followed by 1.3610..
- 1.3550 is the next support line, with 1.35 being a stronger line.
EUR/USD Fundamentals
- 6:00 German Industrial Production. Exp. +0.3%, actual -1.8%.
- 8:30 Euro-zone Sentix Investor Confidence. Exp. 7.5 points.
*All times are GMT.
For more events and lines, see the Euro to dollar forecast.
EUR/USD Sentiment
- More German weakness: Weak German data continues to be a concern: the drop in industrial output joins the slip in retail sales, a rise in unemployment and bigger than expected drop in factory orders. While worries are gradually accumulating regarding French growth, doubts are mounting regarding the ability of Germany to pull everybody out.
- Early US rate hike?: After the US gained 288K jobs in June including a drop in the unemployment rate from 6.3% to 6.1%, without a drop in the participation rate, Goldman Sachs brought forward their rate hike expectations from 2016 to Q3 2015. While this is still far, this is the first time they bring forward such expectations.
- Dovish Draghi: The ECB did not alter monetary policy and this was expected. However, Mario Draghi did say that they are watching EUR/USD with “much attention” and that QE is certainly on the cards. Is the threat real? Other ECB members don’t see it coming in the near future. Yet in any case, a rate hike in the euro-zone isn’t on the cards until 2017.
- US GDP looks like an outlier: The final US GDP release for Q1 was a disaster, as the economy contracted by a staggering 2.9% in Q1. However, the markets remained calm, and the US dollar escaped without much damage against most of its major rivals. More recent releases have been better, notably consumer confidence and housing data. With the job market gaining traction also in the winter months, the figure seems somewhat detached from reality.
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