EUR/USD is treading softly in Wednesday trading, showing little movement. The pair continues to trade in the high 1.34-range in Wednesday’s European session. In economic news, German Ifo Consumer Climate rose slightly and matched the forecast. In the US, CB Consumer Confidence fell in August. Wednesday’s key releases out of the US are Core Durable Goods Orders and New Home Sales.
Here is a quick update on the technical situation, indicators, and market sentiment that moves euro/dollar.
- In the Asian session, EUR/USD was steady, touching a low of 1.3462 and consolidating at 1.3473. The pair is unchanged in the European session.
Current range: 1.3450 to 1.3500.
- Below: 1.3450, 1.3415, 1.3325, 1.3240, 1.3175, 1.3050 and 1.3000.
- Above: 1.3500, 1.3570, 1.3650, 1.3710, 1.3800, 1.3870 and 1.3940.
- 1.3450 continues to provide weak support.
- On the upside, 1.3500 is under pressure. 1.357o is next.
- 6:00 GfK German Consumer Climate. Exp. 7.1 points, Actual 7.1 points.
- 12:30 US Core Durable Goods Orders. Exp. 1.1%.
- 12:30 US Durable Goods Orders. Exp. 0.0%.
- 14:00 US New Home Sales. Exp. 422K.
- 14:30 US Crude Oil Inventories. Exp. -1.0M.
* All times are GMT.
For more events and lines, see the Euro to dollar forecast.
- German business confidence high, but misses expectations: German Ifo Business Climate has looked very strong in recent releases, and the current release seems to have been a victim of its own success. The key indicator improved slightly to 107.7 points, its highest level since March 2012. However, the markets had expected a higher figure of 108.4 points. Business Climate has now improved over five consecutive months, pointing to stronger confidence in the German economy. This bodes well for both the Eurozone and the euro.
- Euro Manufacturing PMIs down, but Services PMIs improve: Eurozone, German and French PMIs were released earlier in the week, and there was a strong consistency among the readings, as all the Manufacturing PMIs lost ground, while the Services PMIs improved. The good news from the mixed results was that all of the indexes posted readings above the 50-point level, with the exception of French Flash Manufacturing PMI. The 50-point line is a separator between contraction and expansion, so with the one exception, the services and manufacturing sectors continue to show expansion.
- Merkel rolls to easy win: As widely expected, Chancellor Angela Merkel was re-elected to a third straight term in convincing style. Merkel’s conservative bloc steamrolled to victory but failed to win a super majority, which would have enabled it to form the government on its own. This means that Merkel will have to reach out to one of the opposition parties to form a coalition, which could lead to some political uncertainty. The most likely scenario is a coalition with the center-left SPD, but that party’s head, Ralf Stenger, is in no hurry and can afford to wait to be courted by Merkel. Merkel’s big win is good news for the euro, but if the coalition negotiations get bogged down, the euro could lose ground.
- Markets eye key US releases: US data looked strong last week, and the markets are hoping that the positive news continues on Wednesday, with the release of Core Durable Goods Orders and New Home Sales. The markets are expecting stronger figures from both key indicators, which could give the US dollar a badly-needed boost. The greenback remains under broad pressure, courtesy of the Fed’s non-taper decision last week.
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