EUR/USD tried to rise up from support early in the week, rising on the weakness of the US dollar. However, the euro has issues of its own and the pair eventually dropped back to support. Do we have a “sell the rallies” pattern? Interesting US housing data lies ahead.
. Here is a quick update on what’s moving the pair.
- EUR/USD climbed up to 1.3615before sliding back down towards 1.36.
- Current range: 1.3585 to 1.3650.
Further levels in both directions:
- Below: 1.3585, 1.3550, 1.35, 1.3450, and 1.34
- Above: 1.3650, 1.3677, 1.37, 1.3740, 1.3785, 1.3830, 1.3865 and 1.3905.
- 1.3585 is an immediate support line, serving as a perfect separator of ranges.
- On the upside, 1.3650 worked perfectly well as resistance, and is now stronger..
- 7:00 French Flash Services PMI. Exp. 49.5, actual 48.2 points/
- 7:00 French Flash Manufacturing PMI. Exp. 49.6 points, actual 47.8.
- 7:30 German Flash Services PMI. Exp. 55.8, actual 54.8.
- 7:30 German Flash Manufacturing PMI. Exp. 52.7, actual 52.4 points.
- 8:00 Euro-zone Flash Services PMI. Exp. 53.4. Actual 52.8.
- 8:00 Euro-zone Flash Manufacturing PMI. Exp. 52.2, actual 51.9 points.
- 13:45 US Flash Manufacturing PMI. Exp. 56.1 points.
- 14:00 US Existing Home Sales. Exp. 4.74 million.
*All times are GMT.
- Weakness in the euro-zone: France only temporarily recovered according to the PMIs, and the streak of German disappointments extend from the previous week. Apart from the disappointing PMIs, tomorrow’s IFO Business Climate will be in the limelight. See how to trade the IFO figure with EURUSD.
- Yellen’s dovishness weighs on USD: The Federal Reserve tapered QE for the 5th time to $35 billion/month as expected. The Fed also lowered growth forecasts, and this no surprise either. After the strong inflation numbers, some had expected a more hawkish tone from Yellen. Yet she described the data as noisy and left rate hike expectations in the far future. This eventually triggered a big USD sell off that continues into the new week.
- US focus turns to housing: After both jobless claims and the Philly Fed figure came out slightly above expectations, the focus shifts this week to an area which caused worries to the Fed: housing. Today’s existing home sales and more importantly the new home sales numbers will be very closely watched.
- Eurozone inflation remains weak: So far, the euro did not lose enough ground even though various European interest rates have fallen after Draghi’s big announcement. This implies yet another month of low inflation in the euro-zone. We will get initial German numbers next week. If the euro remains strong and inflation continues falling, the ECB will have to be even more creative.