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It’s a quiet start to the new trading week for EUR/USD , as the pair trades in the mid-1.36 range in  Monday’s European session. There is some concern in the markets following unexpectedly strong showings by anti-EU parties in European parliamentary elections, which took place on the weekend. It’s a very quiet day on the fundamental release front, with US markets closed for the Memorial Day holiday. In the Eurozone, German Consumer Confidence was unchanged in April at 8.5 points, matching the forecast. Later in the day, ECB head Mario Draghi will speak at an ECB forum in Lisbon.  

  • EUR/USD  was  quiet  in the Asian session, trading around 1.3620. The pair has edged higher in European trading.

Current range: 1.3560 to 1.3650.

Further levels in both directions:     EURUSD Daily Forecast May26

 

  • Below: 1.3560, 1.3515 and 1.3475 and 1.34
  • Above: 1.3650, 1.37, 1.3740, 1.3785, 1.3830, 1.3865, 1.3905, 1.3964 and  1.40
  • 1.3560  is providing  strong support.  
  • On the upside, 1.3650 is under strong pressure. The  round number of 1.37 follows.  

 

EUR/USD Fundamentals

  • 6:00 GfK German Consumer Climate. Estimate 8.5, actual 8.5 points.
  • 8:00 ECB President Mario Draghi Speaks.

*All times are GMT

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

 

EUR/USD Sentiment

  • Shock in Europe as far-right parties surge: With Eurozone countries suffering from weak growth and high unemployment, voters  had a  chance to lash back  in European parliamentary elections on the weekend, and  their frustration and anger was  heard loud and clear at the ballot box.  Anti-EU and far-right parties in the UK, Germany  and France made sweeping gains.  French Prime Minister Manuel Valls called the results an “earthquake” and the elections could push down the euro, although so far the currency  has remained firm.
  • Fed thinking post-QE: There were no surprises  from the  Federal Reserve minutes on Wednesday, and there was no dramatic response from the markets. In the minutes, policymakers discussed an exit strategy from its QE stimulus program, which is set to terminate at the end of 2014. This will likely mean an increase in interest rates once QE is over and done with, but the minutes didn’t provide a timetable as to when rates might go up and by how much. Low inflation levels means there is less pressure on the Fed to raise rates next year, but the economic  conditions could change in the meantime. The Federal Reserve remains comfortable with its accommodative stance, and will want to see stronger growth and employment numbers before making changes to monetary policy, such as raising rates.
  • Euro PMIs point down: Eurozone, German  and  French  Manufacturing PMIs  weakened last  month, pointing to trouble in the manufacturing sector of the major Eurozone members. The French indicator dipped to 49.3 points, pointing  to contraction. German and Eurozone data remained above the 50-point level, which points to  expansion, but both fell short  of expectations.  Weak PMIs is one more reason why the ECB could make a monetary move in June.
  • Will the ECB press the trigger? After climbing  close to the key 1.40 level, the euro  put on the brakes  after ECB president Mario Draghi stated he  was prepared to take action in June to tackle low growth and weak inflation. The markets have heard tough talk  (and no action) from Draghi before, but there is a feeling  in the air that the June ECB meeting could be  different.  There is speculation that the ECB could cut  the benchmark rate, which  is currently at just 0.25%,  or lower deposit rates, which are at 0%, into negative territory.  As we get closer to the June meeting,  traders  can expect some volatility from EUR/USD.