EUR/USD – Euro Climbs, Eyes 1.35 Level

EUR/USD continues to move higher, and has now reached the high-1.34 range. The euro has gained over one cent so far this week. In the US, there was good news from the Federal Budget Balance, which posted a rare surplus in January. There was good news to start off the day, as Eurozone Industrial Production rose sharply, easily beating the market forecast. Today’s highlights are US Retail Sales and Core Retail Sales.

With little fanfare, EUR/USD has been on the move throughout the course of the week. The euro has now gained about a cent against the US dollar since Monday, and has the 1.35 level in its sights. The euro has only recovered partially from last week’s sharp losses, but EUR/USD continues to be active. With the US releasing Retail Sales on Wednesday and Unemployment Claims on Thursday, we could see further movement if the readings are not in line with market expectations.

ECB head Mario Draghi paid a visit to Spain on Tuesday, and addressed the Spanish Parliament in Madrid. Draghi had warm words for his hosts, declaring that “Spain is on the right track”. He was upbeat about the Spanish banking sector, stating that the country’s banks have recovered and are now able to provide credit. Draghi dismissed the idea of establishing an exchange rate policy to keep the euro from rising too rapidly, saying that it was “inappropriate” for the ECB to aim for a particular target. He did, however, reiterate that the ECB is closely monitoring the recent fluctuations in the currency markets. The ECB head since he did not believe there was a currency war going on, although some analysts would beg to differ with his assessment. The euro has risen rapidly against the dollar in 2013, and the yen has coughed up 20% of its value against the euro in the past 3 months.

The markets will be focusing on Moscow later this week, as it hosts the G-20 Summit. An important topic on the agenda will be the issue of exchange rates, with the euro posting sharp against the yen and the dollar. There is mounting concern about “currency wars”, as countries are increasingly relying on monetary policy to kick-start their flagging economies. French President Francois Hollande has registered his displeasure, stating that countries should not manipulate their currencies to gain trade advantages. The Institute of International Finance, which is comprised of leading banks and financial institutions, has urged the G-20 to take steps to avoid the “possible discord on exchange rates”. However, given the need to reach a consensus, analysts expect any statement on currencies from the G-20 to be mild in nature.

 

EUR/USD for Wednesday, February 13, 2013

Forex Rate Graph 13/2/13

EUR/USD February 13  at 10:50 GMT

1.3489 H: 1.3492 L: 1.3438

 

EUR/USD Technical

S3 S2 S1 R1 R2 R3
1.3350 1.34 1.3480 1.3573 1.3627 1.3690

 

EUR/USD has broken out in Wednesday trading, and is close the 1.35 line. There is strong resistance at 1.3573. This line has held since last week, when the euro took a tumble. On the downside, there is very weak support at 1.3480. Look for this line to see further activity. The next support line is at the round number of 1.34.

Current range: 1.3480 to 1.3573.

Further levels in both directions:

  • Below: 1.3480, 1.34, 1.3350, 1.3280, 1.3240 and 1.3170
  • Above: 1.3573, 1.3627, 1.3690, 1.3745, 1.3796 and 1.3858

 

OANDA’s Open Position Ratios

The EUR/USD ratio is once again showing movement towards long positions. This is consistent with what we are seeing from the currency pair, which is enjoying an upward rally. Most of the open positions in the ratio are short, although the long position component is catching up quickly.

The euro has posted strong gains against the dollar this week, and is close to the 1.35 line. Will the upward momentum continue? We could further volatility from the pair, as the US releases Retail Sales data later today.

EUR/USD Fundamentals

  • 2:00 US President Obama delivers State of the Union Address.
  • 7:00 German WPI. Estimate 0.4%. Actual 0.3%.
  • 10:00 Eurozone Industrial Production. Estimate 0.3%. Actual 0.7%.
  • 13:30 US Core Retail Sales.  Estimate 0.1%.
  • 13:30 US Retail Sales. Estimate 0.1%.
  • 13:30 US Import Prices. Estimate 0.8%.
  • 15:00 US Treasury Secretary Jack Lew Speaks.
  • 15:00 US Business Inventories. Estimate 0.3%.
  • 15:30 US Crude Oil Inventories. Estimate 2.4M.
  • 16:10 US FOMC Member James Bullard Speaks.
  • 18:00 US 10-year Bond Auction.

 

*Key releases are highlighted in bold

*All release times are GMT

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Kenny Fisher

Kenny Fisher

Currency Analyst at Market Pulse
Kenny Fisher joined OANDA in 2012 as a Currency Analyst. Kenny writes a daily column about current economic and political developments affecting the major currency pairs, with a focus on fundamental analysis. Kenny began his career in forex at Bendix Foreign Exchange in Toronto, where he worked as a Corporate Account Manager for over seven years.