EUR/USD is hugging the 1.25 level, rising from the lows seen early in the week and currently unable to pick a new direction. US data was good so far this week ahead of the Non-Farm Payrolls while Spanish jobless claims disappointment. Before that, we have midterm elections in the US and some other important data. Will we see a downwards move ahead of the big events? It is certainly possible.
Here’s a quick update on technicals, fundamentals and sentiment moving the pair.
- Asian session: The pair managed to crawl back above 1.25.
- Current range: 1.25 to 1.2570.
Further levels in both directions:
- Below: 1.25, 1.2440, 1.2360, 1.2250.
- Above: 1.2570, 1.2620, 1.2660, 1.2750.
- 1.2440 is an old line and also the recent low, making it key support.
- 1.2660 is strong resistance now.
EUR/USD Fundamentals
- 8:00 Spanish Unemployment Change. Exp. 23.4K, actual 79.2K.
- 10:00 EU Economic Forecasts
- 10:00 Euro-zone PPI. Exp. 0%.
- 13:30 US Trade Balance. Exp. -40 billion.
- 15:00 US Factory Orders. Exp. -0.4%.
- 15:00 US IBD/TIPP Economic Optimism. Exp. 46.3 points.
* All times are GMT.
For more events and lines, see the Euro to dollar forecast.
EUR/USD Sentiment
- Midterm elections: All House seats and a third of the Senate seats are up for grabs. The House is expected to remain in Republican hands while the Senate majority could also shift from Democrats to Republicans. In the current political atmosphere, there seems to be little chance the new composition of Congress will be able to push reforms. Nevertheless, these elections are set to impact markets.
- ECB eyed: The European Central Bank convenes on Thursday on the backdrop of ongoing weak inflation, despite a weaker euro, and it’s not only oil prices. Will Draghi hint about more aggressive steps? There is speculation about outright QE or buying corporate bonds, but both seem unlikely. A vague hint about a “massive” or “sizable” expansion could do the job.
- Hawkish Fed: The Fed ended QE and also sounded quite bullish about employment, acknowledging “solid job gains”. In addition, Yellen and her colleagues were not too worried about inflation and there was one dovish dissenter for a change. All this supported the greenback.
- Strong US data: GDP grew at an annual level of 3.5% in the US, better than expectations. While the internal components did not shine, the general picture is positive and this notion strengthened with a beat in the ISM Manufacturing PMI, the first hint towards the NFP. Tomorrow we get ADP and the services sector PMI.
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