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EUR/USD    is not showing  much movement on Tuesday, as the pair trades quietly in the mid-1.36 range in the European session.  In the Eurozone, today’s sole event is remarks from ECB head Mario Draghi, who is attending an ECB forum in  Lisbon.  In the US, the markets are back  to work  after the Memorial Day holiday. There are two key events on the calendar – Core Durable Goods Orders and CB Consumer Confidence.  

  • EUR/USD  edged higher in the Asian session but could not consolidate these gains, closing the session at 1.3647. The pair  is unchanged  in European trading.

Current range: 1.3560 to 1.3650.

Further levels in both directions:

EURUSD Daily Forecast May27

 

  • Below: 1.3560, 1.3515 and 1.3475 and 1.34
  • Above: 1.3650, 1.37, 1.3740, 1.3785, 1.3830, 1.3865, 1.3905, 1.3964 and  1.40
  • 1.3560  is providing  strong support.  
  • On the upside, 1.3650 remains under strong pressure. The  round number of 1.37 follows.  

 

EUR/USD Fundamentals

  • 12:30 US Core Durable Goods Orders. Estimate 0.2%. See how to trade this event with EUR/USD.
  • 12:30 US Durable Goods Orders. Estimate -0.5%.
  • 13:00 US S&P/CS Composite-20 HPI. Estimate 11.9%.
  • 13:00 US HPI. Estimate 0.5%.
  • 13:30 ECB President Mario Draghi Speaks.
  • 13:45 US Flash Services PMI. Estimate 55.6 points.
  • 14:00 US CB Consumer Confidence. Estimate 83.2 points.
  • 14:00 US Richmond Manufacturing Index. Estimate 5 points.

*All times are GMT

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

 

EUR/USD Sentiment

  • Draghi utters the “D” word:   Despite clear signals to the contrary, ECB head Mario Draghi has shrugged off concerns about deflation in the Eurozone for months.  That finally changed on Monday, when Draghi acknowledged that deflation was a serious issue and that the ECB stood ready to take action. The markets looked at his remarks as another sign that the ECB could take action in June. The central bank has a host of tools it can implement, including a reduction in interest rates, asset purchases, or liquidity injections. Any one of these moves would likely have a strong impact on EUR/USD, which has retracted somewhat since testing the 1.40 level earlier in May.
  • Shock in Europe as  eurosceptic parties surge: Anti-EU parties posted stunning victories in  European parliamentary elections held on Sunday.  These “eurosceptic” parties  posted  made strong  gains across the continent,  notably in  France, the UK and Greece.  With  the Eurozone struggling with  low growth and high unemployment, voters had a chance to lash back  in the elections, and their frustration and anger was heard loud and clear at the ballot box. French Prime Minister Manuel Valls called the results an “earthquake” and the elections could  weigh on  the euro, although so far the currency has remained firm.
  • Fed discusses QE exit plans: There were no surprises  from the  Federal Reserve minutes on Wednesday, and there was no dramatic response from the markets. In the minutes, policymakers discussed an exit strategy from its QE stimulus program, which is set to terminate at the end of 2014. This will likely mean an increase in interest rates once QE is over and done with, but the minutes didn’t provide a timetable as to when rates might go up and by how much. Low inflation levels means there is less pressure on the Fed to raise rates next year, but the economic  conditions could change in the meantime. The Federal Reserve remains comfortable with its accommodative stance, and will want to see stronger growth and employment numbers before making changes to monetary policy, such as raising rates.
  • Euro PMIs point down: Eurozone, German  and  French  Manufacturing PMIs  weakened in April, pointing to trouble in the manufacturing sector of the major Eurozone members. The French indicator dipped to 49.3 points, pointing  to contraction. German and Eurozone data remained above the 50-point level, which points to  expansion, but both fell short  of expectations.  Weak PMIs is one more reason why the ECB could make a monetary move in June.