EUR/USD – Settles Down As Markets Await US Housing Data

After some sharp movement in mid-week trading, EUR/USD has steadied, as the pair trades quietly in the mid-1.33 range in Friday trading. In economic releases, US Unemployment Claims, a key release, looked weak as it posted a four-week high. Friday’s key release is US New Home Sales. As well, the Jackson Hole Symposium, which brings together US and foreign finance officials, continues until Saturday.

There has been plenty of speculation about when the Federal Reserve will scale back its QE program, and the markets were hopeful that the release on Wednesday of the FOMC minutes of its most recent policy meeting would shed some light on the Fed’s plans. The minutes didn’t contain any dramatic news, but the US dollar still gained almost one cent against the euro. Fed officials were described as “broadly comfortable” with plans to taper QE, but remain split on the timing of such a move. The policymakers noted that recent US economic data was “mixed” and all members agreed that it was still too early to scale back the current QE program, under which the Fed purchases $85 billion in assets each month. The markets are anticipating that the Fed will make a move in the near future, and traders should be prepared for a scaling back of QE as early as September.

Meanwhile, the Kansas City Federal Reserve is currently holding its annual economic summit in Jackson Hole, Wyoming. The conference attracts central bankers, finance ministers and academics, and has been a market-mover on previous occasions. Federal Reserve chair Bernard Bernanke will not be attending, but other high-profile Federal Reserve policymakers are participating. The markets are monitoring the conference, hoping for some clues about QE tapering and future monetary policy.

Is another bailout in the works for Greece? German finance minister Wolfgang Schaeuble said as much earlier this week. The sever austerity program required under the previous bailout agreements has taken its toll on the Greek economy, and the government faces a funding shortfall if it doesn’t get outside help. If another bailout is approved by Brussels, the sums involved will be relatively small compared to the previous two rescue packages, which total 240 billion euros. However, the possibility of giving Greece more money is already drawing sharp criticism in Germany, which faces national elections in September. As Germany is the Eurozone’s biggest economy, it will end up contributing the largest share of any bailout, and with plenty of economic problems at home, many Germans are against providing more aid to struggling countries such as Greece.

 

EUR/USD for Friday, August 23, 2013

 

Forex Rate Graph 21/1/13
EUR/USD August 23 at 9:50 GMT

EUR/USD 1.3366 H: 1.3371 L: 1.3336

 

EUR/USD Technical

S3 S2 S1 R1 R2 R3
1.3100 1.3162 1.3275 1.3400 1.3476 1.3585

 

EUR/USD is trading quietly on Friday, as the proximate support and resistance lines remain in place (S1 and R1 above). The pair traded edged lower in the Asian session and consolidated at 1.3343. EUR/USD has edged higher in European trading. The pair continues to face resistance at the round number of 1.34. This line could face pressure if the euro shows some strength. The next line of resistance is at 1.3476.

On the downside, the pair continues to receive support at 1.3275. There is stronger support at 1.3162. This line has remained firm since mid-July.

  • Current range: 1.3275 to 1.3400

 

Further levels in both directions:

  • Below: 1.3275, 1.3162, 1.3100, 1.3050 and 1.3000
  • Above: 1.34, 1.3476, 1.3585 and 1.3649

 

OANDA’s Open Positions Ratio

EUR/USD ratio is unchanged in Friday trading. This is reflected in the pair’s current movement, as the pair has shown little movement so far today. The ratio continues to show an overwhelming majority of short positions, indicating strong trader bias towards the US dollar making inroads at the expense of the euro.

EUR/USD has settled down and appears comfortable in the mid-1.33 range. We could see some movement from the pair before the weekend, with the US releasing key housing numbers later today.

 

EUR/USD Fundamentals

  • 6:00 German Final GDP. Exp. 0.7%. Actual 0.7%.
  • 13:00 Belgium NBB Business Climate. Exp. -11.1 points.
  • 14:00 Eurozone Consumer Confidence. Exp. -17 points.
  • 14:00 US New Home Sales. Exp. 487K.
  • Day 2 – Jackson Hole Symposium.

 

*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.