EUR/USD Nov. 27 – Further Gains As German Consumer

EUR/USD  continues to point upwards and has posted  gains in Wednesday trading. The pair is testing at the 1.36 line in Wednesday’s European session. In economic news US releases painted a mixed picture on Tuesday, as Building Permits looked sharp, breaking above the 1 million mark.  However,  Consumer Confidence was a disappointment, slipping to a seven-month low. In Wednesday’s releases, German Consumer Climate continues to climb and posted a multi-year high in October. In the US, there a host of releases, highlighted by Core Durable Goods Orders 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 moved higher  in the Asian session, touching a high of 1.3600. The pair consolidated at 1.3578. In the European session, the pair has climbed to the 1.36 line.
• Current range: 1.3570 to 1.3650.

Further levels in both directions:  

• Below: 1.3570, 1.3500, 1.3440, 1.34, 1.3320, 1.3240, 1.3175, 1.31, 1.3050, 1.3000 and  1.2940.
• Above: 1.3650, 1.3710, 1.3800 and 1.3870.
• 1.3570 is providing weak support. The round number of 1.3500 is next.
• 1.3650 is the next line of resistance. This is followed by 1.3710.

EUR/USD Fundamentals

• 9:00 GfK German Consumer Climate. Exp. 7.1, Actual 7.4 points.
• Tentative – German 10-year Bond Auction.
• 13:30 US Core Durable Goods Orders. Exp. 0.5%.
• 13:30 US Unemployment Claims. Exp. 331K.
• 13:30 US Durable Goods Orders. Exp. -1.5%.
• 14:45 US Chicago PMI. Exp. 60.6 points.
• 14:55 US Revised UoM Consumer Sentiment. Exp. 73.1 points.
• 14:55 US Revised UoM Inflation Expectations.
• 15:00 CB Leading Index. Exp. 0.1%.
• 15:30 US Crude Oil Inventories. Exp. 0.5M.
• 17:00 US Natural Gas Storage. Exp. -11B.

*All times are GMT

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

EUR/USD Sentiment

• German Consumer Climate Jumps: There was more good news out of Germany on Wednesday, as Consumer Climate continues to point upwards. The key indicator climbed to 7.4 points in October, up from 7.0 points the month before. This strong reading was a multi-year high and beat the estimate of 7.1 points. We’ll get another look at German data on Thursday, with the release of Preliminary CPI and Unemployment Change.
• US Building Permits Sparkle: Building Permits pushed over the 1 million mark, hitting 1.03 million units. This was the highest level since June 2008 and  beat the estimate of 0.94 million.  The September release, which had been postponed due to the government shutdown last month, came in at 0.97 million, above the estimate of 0.94 million. These solid numbers come on the heels of Pending Home Sales, which looked sluggish after posting a fifth straight decline.
• Euro shrugs off Eurozone troubles: We’ve heard plenty about the lack of inflation and growth in the Eurozone, and the ECB is considering further monetary action to shake the economy out of its slumber. Despite all this, the euro continues to look good, and has gained about 250 points against the US dollar in the last two weeks. However, the euro still is well below the levels we saw in late October, when EUR/USD was trading around 1.38.
• ECB mulls negative deposit rate: With inflation remaining very weak despite recent rate cuts, the ECB is considering cutting the deposit rate, which currently stands at 0.0%. However, a move into negative territory would represent unchartered territory and could have negative consequences for the economy. So if the ECB does go ahead and reduce to deposit rate, we could see a “mini cut” of less than 0.25%. The OECD is also expressing concern about the dangers of deflation in the Eurozone and is urging the ECB to consider implementing quantitative easing.  ECB Governing Council member Ardo Hansson confirmed that the ECB could take further steps such as lowering the benchmark or deposit rates.
• Merkel reaches coalition agreement: German Chancellor Angela Merkel’s CDU party has reached an agreement with the Social Democrats to form a coalition, two months after her victory in national elections. This will be her third term in office. Merkel has been opposed to joint liability for Eurozone members in debt, and this policy will likely continue under the new government.