EUR/USD is trading in a limited range just under resistance at 1.2660, despite a lot going on in the markets. It managed to stabilize after the falls seen yesterday. Fears of a German recession worsened with yesterday’s data and forecast downgrade. In his first speech today, Draghi did not talk about monetary policy but he speaks again later on. In addition, we have important US figures. It’s about to get busy
Here’s a quick update on technicals, fundamentals and sentiment moving the pair.
- Asian session: The pair traded in a narrow range under resistance at 1.2660.
- Current range: 1.26 to 1.2660
Further levels in both directions:
- Below: 1.27, 1.2660, 1.26, 1.2570 and 1.25.
- Above: 1.2750, 1.28 and 1.2860
- 1.2750 is still resistance, despite the temporary breach.
- 1.2660 strengthens as support.
EUR/USD Fundamentals
- 6:00 German Final CPI. Exp. 0%, actual 0%.
- 7:00 ECB president Mario Draghi talks. The speech focused on banking and not on monetary policy.
- 12:30 US retail sales. Exp. +0.2%.core retail sales. Exp. -0.1%.
- 12:30 US PPI, exp. +0.1%. Core exp. +0.1%.
- 12:30 Empire State Manufacturing Index. Exp. 20.3 points.
- 14:00 US Business inventories. Exp. +0.4%.
- 18:00 ECB president Mario Draghi speaks.
- 18:00 US Beige Book.
- 18:00 US Federal Budget Balance. Exp. 82.3 billion.
* All times are GMT.
For more events and lines, see the Euro to dollar forecast.
EUR/USD Sentiment
- German forecasts downgraded: German business confidence turned negative for the first time since 2012. The ZEW figure was later followed by another disappointment: the German government cut forecasts quite sharply. Both growth and inflation look weak now.
- Global gloom: The gloom around the world, coming from IMF worries among others is hitting the stock market and resulting in a sharp drop in oil prices. So far, the yen seems to be the big winner, with the dollar trailing behind. The euro is relatively stable, but perhaps this is an opportunity to sell the euro.
- Euro rate hikes not before 2017: In his speech in Washington, Draghi maintained a dovish tone, vowing to do what is necessary to battle low inflation and repeated his usual stance. What he also said is that markets see a move on the rates only in 2017, and this is certainly a long time off. Will he repeat this in the second speech?
- Greek worries: Greece and the troika are on a collision course once again. While the country has stayed away from the news for quite some time, it could creep back. Adding political instability and a primary surplus to the mix already sent Greek bond yields higher, above 7%.
- State of the US consumer: While expectations for a rate hike in the US have been somewhat pushed back, the data remains positive. The biggest part of the US economy is consumption, and we will get an updated picture for consumption in the release of retail sales. On Friday we’ll get consumer confidence.
In our latest podcast, we talk about the US labor market, run down the FOMC minutes, reflect on falling oil and discuss next week’s events:
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