EUR/USD is now grinding a bit lower, sliding from the levels seen yesterday, when it enjoyed the news of Chinese stimulus. The market is now focused on the Federal Reserve: will Yellen hint about the timing of the rate hikes? Will they remove the word “considerable” regarding the timing rate hike? And beforehand, we get a reminder of why Draghi did what he did.
Here’s a quick update on technicals, fundamentals and sentiment moving the pair.
- Asian session: The pair crawled back down to range..
- Current range: 1.2920 to 1.2960
Further levels in both directions:
- Below: 1.2920, 1.2865, 1.2840, 1.28 and 1.2750.
- Above: 1.2960, 1.30, 1.3050, 1.31 and 1.3175.
- There are two clear ranges: 1.2865 to 1.2920 and 1.2920 to 1.2955.
EUR/USD Fundamentals
- 8:00 Italian Trade Balance. Data is for both June and July.
- 9:00 Euro-zone final CPI. Exp. +0.3%, core exp. 0.9%.
- 12:30 US CPI. Exp. +0.1%, core CPI exp. +0.2%.
- 12:230 US Current account. Exp. -114 billion.
- 14:00 US NAHB Housing Market Index. Exp. 56 points.
- 18:00 US Fed decision. See the Fed Quick Preview: Considerable chance of dollar slide. Also note the updated forecasts.
- 18:30 Janet Yellen talks.
* All times are GMT.
For more events and lines, see the Euro to dollar forecast.
EUR/USD Sentiment
- Dovish Fed?: A 7th taper is expected, but what will the sentiment be? There is speculation that the Fed will remove the word “considerable” regarding the timing of the first rate hike, but there are reasons to think otherwise as recent data was somewhat underwhelming. We talk about this in the latest podcast. You are welcome to follow a live coverage of the Fed event. Details to be released later on.
- Chinese sugar rush: China has announced an injection of 500 billion yuan into 5 big banks in reaction to recent Chinese weakness. The news hit the dollar across the board and EUR/USD got close to 1.30, but not kept some distance and eventually fell. As time passed by, it seems that the impact of this news was initially exaggerated.
- Updated euro-zone inflation numbers: The initial read for August showed that inflation fell to 0.3%, a new multi-year low. This will likely be confirmed now. A fear of outright deflation has led Draghi to cutting the rates again and announce the ABS. The resulting fall of the euro could in turn lift inflation, but probably not in August.
- Bold call for EUR/USD parity: An analyst sees euro/dollar on a downward trajectory and envisions a slide all the way down to parity. There are good reasons, and parallels to the 90s.
- Weak US industrial output effect: This is usually a second tier figure, but this time the disappointment weighed on the US dollar, pushing it lower across the board. However, the move has since reversed.
- Scottish reverberations: Thursday’s referendum in Scotland is controlling every move of GBP, with mixed polls, but also has implications for the euro: a Yes vote would raise the cause of Catalonia in Spain and perhaps other regions seeking independence.
In our latest podcast, we talk about the FOMC meeting.
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