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EUR/USD  is keeping a nice distance from the 1.35 level, holding on to gains made yesterday as the dollar was sold off. Can it not only stay in the high end of the range but also break out? Weekly jobless claims and the final GDP call for Q2 will both shake markets, but they could point to different directions.  

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 held on to gains seen in the US session and maintained distance from 1.35.

Current range: 1.35 to 1.3570.

Further levels in both directions:  EUR USD technical analysis September 26 2013 fundamental outlook and sentiment

  • 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.
  • The round number of 1.35 works as support, but it isn’t strong.  
  • The September peak of 1.3570 is getting stornger as resistance.

EUR/USD Fundamentals

  • 8:00 Euro-zone  Private Loans. Exp. -1.7%
  • 12:30 US jobless claims. Exp. 319K.  
  • 12:30 US final Q2 GDP. Exp. upgrade from 2.5% to 2.7%.
  • 14:00 US Pending home sales. Exp. -0.9%. See how to trade it with USD/JPY.
  • 14:00 US FOMC member Jeremy Stein talks.

* All times are GMT.

For more events and lines, see the  Euro to dollar forecast.

EUR/USD Sentiment

  • Jobless claims – an outlier?: Most recent US figures have been quite mediocre, but jobless claims continued falling, showing hope for the job market. With a recent weak NFP contrasting the improvement in claims, is this weekly figure still that important? It certainly is a market mover. We might see GDP going one way and claims the other way.
  • Octaper?: FOMC member James Bullard told us that the decision not to taper QE in September was a close call, and that tapering in October is certainly possible. However, consequent FOMC speakers poured some cold water over this option. It seems that the bar is now higher for the Fed to taper. A very strong NFP is needed.
  • Mixed euro-zone indicators: Confusion is also seen in German figures: the Ifo Business Climate disappointed and weighed on the euro, while ZEW exceeded expectations. In any case, the strong German growth of Q2 wasn’t repeated in Q3. Also PMIs sent a mixed message, with weaker manufacturing and stronger services. The European recovery remains fragile.
  • Another LTRO?: ECB president Mario Draghi opened the door to another lending program to banks – seen as indirect QE by some. The two LTRO programs introduced nearly two years ago are being gradually repaid, and this reduces the excess liquidity in the system. More loans to banks mean more euros in the markets – a euro negative. However, this type of QE does not necessarily have a negative impact on the euro, as we’ve seen in the past.
  • Merkel rolls to easy win, but coalition unclear: 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  an absolute 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 negotiations could last for a long time.

A recent technical analysis:  EURUSD Could Move Above 1.3600 – Elliott Wave Forecast