EUR/USD was already only 35 pips away from the magical 1.40 line when fresh worries around Ukraine and a comment from Draghi sent the pair down to the previous trading range. As the turbulent week comes to an end, we have some known important US indicators and unknown developments east of the euro-zone that could have a strong effect on the close. How will the pair end the week?
Here is a quick update on the technical situation, indicators, and market sentiment that moves euro/dollar.
EUR/USD Technical
- EUR/USD got comfortable in the 1.3832 to 1.3894 range following the big crash.
Current range: 1.3830 to 1.3895.
Further levels in both directions:
- Below: 1.3830, 1.3773, 1.37, 1.3650 and 1.3560.
- Above: 1.3894, 1.3940, 1.40, 1.4149 and 1.4307.
- 1.40 is still looming above.
- 1.3832 provides strong support.
EUR/USD Fundamentals
- 7:00 German Final CPI. Exp. +0.5%, actual +0.5%.
- 10:00 Euro-zone Employment Change. Exp. 0%.
- 12:30 US PPI. Exp. +0.2%. Core PPI, exp. +0.1%.
- 13:55 US Consumer confidence. Exp. 81.9 points. See how to trade the Consumer Confidence with EUR/USD.
*All times are GMT
For more events and lines, see the Euro to dollar forecast.
EUR/USD Sentiment
- Draghi giveth, Draghi taketh away: ECB president gave the euro a big boost by not making any move in the rate decision. However, when the pair got close to 1.40, he already opened his mouth and released a thinly veiled hint about the exchange rate. This was the main reason for the euro crash.
- Ukraine comeback: As Crimea prepares for a referendum that will determine its return to Russia, there are fears that Russia will also invade eastern Ukraine, where there is some sympathy for Moscow, and also a lot of mining and industry resources. This has turned sentiment sour.
- Chinese worries: The negative trade balance, a corporate default and weaker than expected figures create fears that China is slowing down faster than expected and that this hard landing will impact the entire world.
- China pushing up the euro?: The same China is also thought to be more actively diversifying away from US dollars and hoarding euros, pushing up the value of the common currency.
- Mediocre US numbers: While jobless claims surprised with a drop, the rise in retail sales was actually weak due to downward revisions. Is it the weather? In any case, the numbers may be enough for tapering but not for leading the world forward .
- QE taper likely: With the US posting solid 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.
Share
