Search ForexCrunch

EUR/USD  has  posted losses  in Wednesday trading, as the euro trades  in the  low-1.36 range  in the European session. The losses have erased most of the gains that we saw at the start of  the week.  Eurozone Trade Balance improved to 16.0 billion euros in December, but this was short of the estimate of 16.7 billion. Over in the US,  today’s key event is Core PPI. As well, we’ll get a look at the Empire State Manufacturing Index. On Tuesday, US retail numbers were a mix, as Core Retail Sales beat the estimate while Retail Sales weakened.

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

EUR/USD Technical

  • EUR/USD  weakened in the Asian session,  consolidating at 1.3644. The pair  has edged  lower  early in  the  European  session.

Current range: 1.3615 to 1.3675.

Further levels in both directions:   EUR USD Daily Forecast Jan. 15th.

  • Below:  1.3615, 1.3550, 1.3450, 1.34, 1.3320, 1.3240 and  1.3175.
  • Above: 1.3675, 1.3710, 1.3800, 1.3832, 1.3940 and 1.4036.
  • 1.3675 is the first line of resistance. 1.3710 follows.
  • On the downside, 1.3615 is under pressure. 1.3550 is next.

 

EUR/USD Fundamentals

  • 10:00 Eurozone Trade Balance. Exp. 16.7B. Actual 16.0B.
  • 13:30 US PPI. Exp. 0.5%.
  • 13:30 US Core PPI. Exp. 0.1%.
  • 13:30 US Empire State Manufacturing Index. Exp. 3.2 points.
  • 15:30 US Crude Oil Inventories.
  • 19:00 US Beige Book.

*All times are GMT

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

 

EUR/USD Sentiment

  • US retail numbers in all directions: US retail sales numbers painted a mixed picture on Tuesday. Retail Sales dropped sharply to 0.2%, down from 0.7% in November. However, this figure matched the forecast. Core Retail Sales took the opposite route, jumping to 0.7%, compared to 0.4% the month before. This easily beat the estimate of 0.4%. Retail sales are an important gauge of consumer spending, and these numbers will have to improve if the recovery is to pick up speed.
  • Non-Farm Payrolls take a hit:  US employment  data had a promising start in 2014, but Friday’s Non-Farm Payrolls was a  disaster, posting its lowest gain since May 2012. The key employment  indicator dropped to  just 74 thousand, down from 203 thousand a month earlier. This was nowhere near the estimate of 196 thousand.  Although the unemployment rate dropped to 6.7%, this was due to a drop in the participation rate. The participation rate dropped to 62.8%,  its lowest since 1978. This figure points to a worrying trend of a jobless US recovery.    
  • Taper  likely to continue despite  weak NFP:  Last week’s dismal Non-Farm Payrolls report may create some concern in the  markets, but is unlikely to change the Federal Reserve’s  path of tapering QE, which it started  just  this month. In December, outgoing Fed chair Bernard  Bernanke  strong hinted that  the  Fed planned to wind  up  QE by the end of 2014,  reducing  the asset-purchase program by increments of $10  billion at each meeting. The Fed  next meets for a policy meeting  on  January 28, and the question is will the Fed reduce  QE by another  $10 billion, down to $65 billion each month.  Most analysts feel that  one bad employment report will not affect the taper  schedule and we will see another reduction in  QE  at the next meeting.              
  • Steady course for ECB: The  first ECB rate announcement of 2014 was a non-event, as the central bank held the benchmark rate at a record low of 0.25%  last week. Mario Draghi’s press conference did not make waves and move the currency markets, as has often been the case in the past. Draghi  said  that monetary policy will remain accommodative for as long as is needed to help the Eurozone economy recover, and that interest rates will likely remain at present or lower levels for the foreseeable future. If growth and inflation indicators continue to look weak, the ECB may have to  take action at its next meeting in February.