EUR/USD is rising once again in the range after falling earlier on the news that Osama Bin Laden was killed. Obama 1, Osama 0 is the score, but the picture in EUR/USD is more complicated, with more factors moving the pair. Here’s a quick update on technicals, fundamentals and what’s going on in the markets.
EUR/USD Technicals
- Asian session: Active session sees Euro/Dollar temporarily dip below 1.4770 on a cheer to the dollar after Osama Bin Laden was killed, but the recovery came afterwards.
- Current range – 1.4770 – 1.4882
- Further levels in both directions: Below 1.4770, 1.47, 1.4650, 1.4580, 1.4520, 1.4450, 1.4375, 1.4282, 1.4160, 1.4030,
- Above: 1.4882, 1.5020, 1.5144, 1.5250, 1.55
- The path is open to reach the round number of 1.50, with resistance just above it at 1.5020. Post-crisis high of 1.5144 also in sight.
- 1.4775 has proven to be very solid as support.
Euro/Dollar dipping and recovering – click on the graph to enlarge.
EUR/USD Fundamentals
- 8:00 European Final Manufacturing PMI. Exp. 57.7. Actual 58 points.
- 9:00 ECB president Jean-Claude Trichet talks.
- 14:00 US ISM Manufacturing PMI. Exp. 59.9 points.
- 14:00 US Construction Spending. Exp. +0.4%.
For more events later in the week, see the EUR/USD forecast
EUR/USD Sentiment
- Osama Bin Laden is dead: The No. 1 terrorist in the world was found in Pakistan and was killed in a battle. This achievement, after 10 years, raises spirits in the US, but the situation is still complicated all over the world.
- Silver collapses and recovers: The price of sliver, which has made sharp moves up recently, made a big fall during the Asian session to around $42. It is now recovering, hand in hand with the recovery of EUR/USD.
- First hint towards Non-Farm Payrolls: ISM Manufacturing PMI provides the first hint towards the Non-Farm Payrolls expected on Friday. This will shake the pair quite strongly.
- Inflation is rising in Europe: Yet again, the initial read of inflation exceeded expectations. Contrary to the US, European eye the headline CPI. No hike is expected next week, but it could push it forward from July to June.
- Bernanke declares QE2 Lite: The first ever press conference by the Fe yielded one important decision: Maturing assets will be reinvested – the central bank will continue being active, even if it won’t expand its balance sheet. This still means printing dollars, and it weakens the dollar across the board. In addition, inflation was dismissed. This theme will accompany us for a long time.
- EU Working on Greek Restructuring: New signs over the weekend show that the European Union is already working a restructuring program for Greece. The announcement can trigger contagion to other countries.
- Weak US growth: Yesterday’s figures were bad – the economy grew by only 1.8% (annualized) – not enough to push unemployment down. And speaking about unemployment, the weekly jobless claims returned to the previous range, after a few good months. Very disappointing.
FXCM Speculative Sentiment Index shows that 66% of traders are short, less than yesterday. According to this contrarian index, this shows more gains for EUR/USD, although less than beforehand.
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