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EUR/USD  was unable to break higher above 1.2570 and found its way down and for good reasons. The FOMC Meeting Minutes were indeed somewhat more dovish than the statement, but only just. The dollar fell only temporarily. From the euro-zone, weakness came from PMIs, with German manufacturing being especially worrying. It is still a very busy day ahead. Where next for EUR/USD?

Here’s a quick update on technicals, fundamentals and sentiment moving the pair.

  • Asian session: The  pair traded steadily under 1.2570, and fell in the European session.
  • Current range:  1.25 to 1.2570

Further levels in both directions:

EURUSD November 20 2014 down euro dollar on Fed weak German PMIs

  • Below: 1.25, 1.2440, 1.2360, 1.2250, 1.2140, 1.2042.
  • Above: 1.2570, 1.2620 and 1.2660
  • 1.2570 is key resistance
  • 1.2360 is the multi-year low and 1.25 is a very round number.

EUR/USD Fundamentals

  • 7:00  German PPI. Exp. -0.1%, actual -0.2%.
  • 8:00 French manufacturing PMI. Exp. 48.9, actual 47.6 points.
  • 8:00 French services PMI. Exp. 48.6, actual 48.8 points.
  • 8:30 German manufacturing PMI. Exp. 51.15 points, actual: 50 flat.
  • 8:30 German services PMI. Exp. 54.5, actual 52.1 points.
  • 9:00 Euro-zone  manufacturing PMI.  Exp. 50.9, actual 50.4 points.
  • 9:00 Euro-zone services PMI. Exp. 52.3, actual 51.3 points.
  • 13:30 US CPI. Exp. 1.6% y/y, -0.1% m/m.
  • 13:30 US Core CPI. Exp. 1.7% y/y, +0.1% m/m.  
  • 13:30 US jobless claims. Exp. 285K.
  • 13:30 US  continuing claims. Exp. 2.37 million.
  • 14:45 US Markit  Flash Manufacturing PMI. Exp. 56.2 points.
  • 15:00 US  Philly Fed Manufacturing Index. Exp. 18.9 points.
  • 15:00 US Existing home sales. Exp. 5.16 million.
  • 15:00 US CB Leading Index. Exp. +0.6%.
  • 15:00 Euro-zone Consumer Confidence. Exp. -11 points.
  • 18:30 US FOMC member  Loretta Mester talks.

* All times are GMT.

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

EUR/USD Sentiment

  • FOMC Minutes: The Fed is worried about falling inflation expectations, but not too worried about the impact of the global slowdown on the US economy. In addition, they didn’t really consider continuing QE and the comments about the job market did meet the optimism in the statement. While they are certainly in a “wait and see” mode, the mild dovishness about inflation resulted in only a temporary dip of the dollar, which was later erased. And when will wages rise? The Fed doesn’t see this yet, but it could come sooner  rather than  later.
  • Germany returns to reality: German PMIs badly disappointed, especially the all important manufacturing sector. These are forward looking indicators, that show that even if growth is not flat as the 50 point mark shows, it isn’t pointing to strong growth. The poor data erased the positive notion seen by business confidence: after long months of decline, the ZEW business confidence has finally risen and regained a positive figure.
  • Mersch  and Draghi talk QE: ECB member Yves Mersch talked  about buying state bonds, gold, shares and ETFs as potential ways to expand the ECB’s  balance sheet. This wide shopping list is probably needed to expand the central bank’s balance sheet by 1 trillion  euros.  ETFs are being bought in Japan and this is a bold proposal. Draghi followed with basically repeating the text of the previous rate decision, but also specifically mentioned buying bonds – QE.
  • Confident Americans: US  retail sales grew more than expected in October and consumer confidence for November increased ahead of Thanksgiving. This good news joins the “quits” component in the JOLTs report, which showed that the number of Americans  quitting their jobs is at the highest level since 2008. This is another sign of confidence.

In our latest podcast, we preview the NFP, run down the ECB, talk about the huge Japanese move, preview the UK and also talk about Brazil:

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