EUR/USD has edged higher in Thursday trading, as the pair trades close to the 1.36 line. In economic news, US Unemployment Claims looked sharp, but manufacturing releases were weak. US markets are closed on Thursday for the Thanksgiving holiday, so it could be a quiet day for EUR/USD. Over in the Eurozone, German Unemployment Change was higher than expected.
Here is a quick update on the technical situation, indicators, and market sentiment that moves euro/dollar.
EUR/USD Technical
- EUR/USD posted modest gains late in the Asian session, consolidated at 1.3579. The pair has pushed above the 1.36 in the European session.
- 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 continues to provide 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
- 7:00 German Import Prices. Exp. -0.2%. Actual -0.7%.
- All Day – German Preliminary CPI. Exp. 0.1%.
- 8:55 German Unemployment Change. Exp. 0K. Actual 10K.
- 9:00 Eurozone M3 Money Supply. Exp. 1.8% Actual 1.4%.
- 9:00 Eurozone Private Loans. Exp. -1.9%. Actual -2.1%.
- 9:10 Eurozone Retail PMI. Actual 48.0 points.
- Tentative – Italian 10-year Bond Auction.
- Tentative Spanish HPI.
*All times are GMT
For more events and lines, see the Euro to dollar forecast.
EUR/USD Sentiment
- German unemployment claims increase: German Unemployment Change pointed upwards in October, increasing by 10 thousand. The markets had expected no change in the reading. The country’s Unemployment Rate remained at 6.9%, better than other members of the Eurozone but high for Germany, the region’s largest economy. Recent German indicators have looked good. Consumer Climate hit a multi-year high, and last week Business Climate and PMIs all beat their estimates.
- US Unemployment Claims Drop: For a second straight week, US Unemployment Claims dropped and came in lower than market expectations, although the euro managed to hold its own despite this. With increasing speculation about a QE taper, employment releases will remain under the market microscope. If employment numbers continue to improve, we can expect the Fed to scale down QE early in 2014, which would likely give a big boost to the US dollar.
- 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 considering deposit rate cut: 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.
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