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The euro rally continues, as EUR/USD  has risen  to the mid-1.39 range  in  Thursday’s  European session.  The soaring euro is trading at its highest levels in 2-1/2 years.  In economic news, French CPI surprised the markets, posting its sharpest gain in almost a year. It’s a busy day in the US, highlighted by Core Retail Sales and Unemployment Claims.

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

EUR/USD Technical

  • EUR/USD  posted strong gains late  in the Asian session, closing at 1.3952. The pair  is unchanged  in the European session.

Current range: 1.3830 to 1.3895.

Further levels in both directions:   EURUSD Daily Forecast Mar.13th

  • Below: 1.3940, 1.3895, 1.3830, 1.3773, 1.37, 1.3650, 1.3560, 1.3515 and  1.3450.
  • Above: 1.40, 1.4149 and 1.4307.
  • 1.40, a key level  is the next resistance line. 1.4149 is stronger.
  • 1.3940  is providing support, but is a weak line. 1.3895 follows.

EUR/USD Fundamentals

  • 7:45 French CPI. Exp. 0.4%. actual 0.6%.
  • 9:00 ECB Monthly Bulletin.
  • 12:30 US Core Retail Sales. Exp. 0.2%.
  • 12:30 US Retail Sales. Exp. 0.3%.
  • 12:30 US Unemployment Claims. Exp. 334K.
  • 12:30 US Import Prices. Exp. 0.6%.
  • 14:00 US  Business Inventories. Exp. 0.4%.
  • 14:00  US Federal Reserve Governor Nomination Hearings.
  • 14:30 US Natural Gas Storage. Exp. -199B.
  • 17:01 US 30-year Bond Auction.
  • 18:00 US Federal Budget Balance. Exp. -223.2B.

*All times are GMT

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

EUR/USD Sentiment

  • Euro climbs towards 1.40: The euro has been on the move since last week’s ECB meeting.  ECB head Mario  Draghi  did not  announce any moves but did say that low inflation was not a problem and the Eurozone was making a modest recovery.  Are the markets buying it? Judging by the euro’s  strong performance, the  answer  is yes. However, with the US releasing  key consumer  spending and employment numbers  later on Thursday,  the dollar could make a comeback if these releases  are strong.
  • US employment numbers fall short: Tuesday’s employment numbers were not a disaster, but could have been  better, and didn’t help the struggling US dollar. JOLTS Job Openings dipped to 3.97 million in February, missing the estimate of 4.02 million  and slipping  to a three-month low.  We’ll get a look at Unemployment Claims later on Thursday, with the markets expecting the key indicator to climb after last week’s strong release. The dollar has taken a hit in the past few days, and a  better than expected  employment  release could put the brakes on the euro’s rally.
  • QE taper likely: With the US posting solid Unemployment Claims and Nonfarm Payrolls late last  week, the markets can breathe more comfortably as the Fed is likely to take its scissors and trim QE next week for the third time. New York Fed President William Dudley stated  last week that  the threshold to alter the Fed’s program to wind up QE was “pretty high”. In other words, short of a serious economic downturn in the US economy, we can expect the QE tapers to continue.
  • Euro surges after ECB decision: The euro rose  sharply after the ECB rate decision late last week, but this time it was due to a lack of action by the central bank, rather than a change in monetary policy or any dramatic comments by Draghi. There had been speculation that the ECB might lower deposit rates into negative territory or even commence a mini-QE scheme. In the end, the Bank held the course, with Draghi reiterating his well-worn script that the ECB’s high degree of accommodative monetary policy would continue for as long as needed. He also noted that the Eurozone economy was recovering at a moderate pace, and shrugged concerns about inflation levels well below the ECB’s target of 2%. Draghi may be able to point to encouraging data out of Germany to bolster his case that the region is headed in the right direction, but  Eurozone data as well as numbers from  major economies, such as France and Italy, raise questions about the health of the Eurozone.