EUR/USD has posted gains in Friday trading. In the European session, the pair is trading in the mid-1.35 range. US Unemployment Claims looked awful on Thursday, jumping to its highest level since April. Friday has a light schedule, highlighted by UoM Consumer Sentiment. There is talk of progress over the US shutdown and debt ceiling, with high-level talks continuing on Capitol Hill.
Here is a quick update on the technical situation, indicators, and market sentiment that moves euro/dollar.
EUR/USD Technical
- In the Asian session, EUR/USD edged higher, touching a high of 1.3545. The pair has moved higher in the European session.
- Current range: 1.3500 to 1.3570.
Further levels in both directions: 
- Below: 1.3500, 1.3460, 1.3415, 1.3325, 1.3240, 1.3175, 1.31, 1.3050 and 1.3000.
- Above: 1.3570, 1.3650, 1.3710, 1.3800, 1.3870 and 1.3940.
- 1.3500 is providing weak support. 1.3460 follows.
- 1.3570 is the next resistance line.
EUR/USD Fundamentals
- 6:00 German Final CPI. Exp. 0.0%, Actual 0.0%.
- 6:00 German WPI. Exp. 0.5%, Actual 0.7%.
- 13:55 Preliminary UoM Consumer Sentiment. Exp. 77.2 points.
- 13:55 Preliminary UoM Inflation Expectations.
- Day 1 – IMF Meetings.
- 15:00 US FOMC Member Jerome Powell Speaks.
- Day 2 – G20 Meetings.
* All times are GMT.
For more events and lines, see the Euro to dollar forecast.
EUR/USD Sentiment
- Shutdown talks continue: There is no end in sight to the budget stalemate just yet, but high-level talks continue between the Republicans and Democrats in Washington. President Obama held a 90-minute meeting with Republican leaders on Thursday, and talks continued into the night. The Republicans have been floating a proposal which would extend the debt ceiling until late November, but want the Democrats to agree to discuss the budget before that. The White House and Democrats are cool to the idea, but both sides have lowered the rhetoric as the shutdown drags on and the debt ceiling hits its limit next week. US Treasury Secretary Jack Lew testified before the Senate finance Committee on Thursday and warned that the political crisis was starting to take a toll on the US economy.
- US Unemployment Claims Soar, but dollar unmoved: Weekly jobless claims jumped last week, but this could be a one-time aberration, in part due to technical issues in California. In the end, this critical release hasn’t helped us gauge the health of the labor market. Non-Farm Payrolls, another vital employment release, is suspended while the shutdown continues.
Yellen nominated for Fed head: The dollar was broadly higher on Wednesday, as President Obama nominated Susan Yellen to replace Bernard Bernanke as chairman of the Federal Reserve. Bernanke is due to retire early next year, and Yellen, who serves as Fed vice-chairwoman, became the leading candidate after former Treasury Secretary Lawrence Summers withdrew his candidacy. Yellen is considered dovish in stance and has supported Bernanke in previous rounds of QE increases. Yellen’s nomination must be confirmed by the Senate, but this is expected to be little more than a formality, as she enjoys wide support from both sides of Congress. - FOMC minutes point to QE tapering: The minutes of the September Fed policy meeting were released on Wednesday. At that meeting, the Fed surprised the markets by not reducing its bond-purchasing program, which currently runs at $85 billion/mth. The minutes stated that the decision not to begin tapering was a “close call”. This has raised speculation that we could see tapering before the end of the year. However, the monkey wrench in all this is the fiscal uncertainty from shutdown and looming debt crisis. As well, the Fed is heavily dependent on key releases such as Non-Farm Payrolls, which have been suspended to the shutdown. So it’s unlikely that we’ll see any moves to reduce QE prior to December.
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