EUR/USD – Euro Steady As Ukraine Crisis Worsens

The euro has edged lower in Monday trading, as EUR/USD trades just below the 1.39 line is the European session. The crisis in the Ukraine continues, following the referendum in the Crimea on Sunday. In economic news, Eurozone CPI dropped slightly in February. In the US, today’s highlight is Empire State Manufacturing Index.

In Sunday’s referendum in Crimea, election officials claimed that 96% of voters backed leaving Ukraine and joining Russia. However, the EU and US continue to denounce the vote as illegal, and have warned Russia against annexing the region. The Western nations are expected to impose stiff sanctions if Russia does not step back and respect Ukrainian sovereignty, but Moscow has not given any indication of doing so. The standoff is likely to get worse, and the crisis could well affect the markets this week.

US releases looked weak on Friday. PPI posted a decline for the first time since November, coming in at -0.1%. The estimate stood at +0.2%. Preliminary UoM Consumer Sentiment dropped below the 80-point level for the first time since November, slipping to 79.9 points. This was short of the estimate of 81.9 points. The weak PPI points to persistently low inflation numbers, which is indicative of an underperforming economy.

The euro looked like it might break above the key 1.40 line on Thursday, but the markets paid attention when ECB head Mario Draghi took note of the soaring continental currency. Draghi said that the “exchange rate is increasingly relevant in assessment of price stability”. Although Draghi also stated that the exchange rate isn’t a policy target for the ECB, the hint from the ECB chief was enough to chill the markets and weigh on the euro.

In the US, concerns about the job market eased after a solid Unemployment Claims release on Thursday. The key indicator dropped to 315 thousand, down from 323 thousand the previous week. This beat the estimate of 334 thousand and marked a three-month low. Core Retail Sales and Retail Sales both posted gains of 0.3%, which were within market expectations. These indicators are the primary gauges of consumer spending, and although the gains were modest, they mark an improvement over the January readings.

 

EUR/USD for Monday, March 17, 2014

Forex Rate Graph 21/1/13

EUR/USD March 17 at 11:15 GMT

EUR/USD 1.3895  H: 1.3912 L: 1.3880

 

EUR/USD Technical

S3 S2 S1 R1 R2 R3
1.3649 1.3786 1.3893 1.4000 1.4149 1.4307

 

  • EUR/USD has edged lower in Monday trade. The pair continues to stay close to the 1.39 line.
  • The round number of 1.40, a key level, is providing resistance. The next line of resistance is at 1.4149.
  • On the downside, the pair is again testing support at 1.3893. The next support level is 1.3786.
  • Current range: 1.3893 to 1.4000

Further levels in both directions:

  • Below: 1.3893, 1.3786, 1.3649, 1.3585 and 1.3410
  • Above: 1.4000, 1.4149, 1.4307 and 1.4397

 

OANDA’s Open Positions Ratio

EUR/USD ratio is pointing to gains in short positions, reversing directions from what we saw on Friday. This is consistent with the pair’s current movement, as the euro has posted losses against the dollar. Short positions retain a strong majority, indicative of trader bias towards the dollar moving higher.

The euro has had a slow start to the new week and continues to trade close to the 1.39 line. The pair is steady in the European session.

 

EUR/USD Fundamentals

  • 10:00 Eurozone CPI. Estimate 0.8%. Actual 0.7%.
  • 10:00 Eurozone Core CPI. Estimate 1.0%. Actual 1.0%.
  • 12:30 US Empire State Manufacturing Index. Estimate 6.6 points.
  • 13:00 US TIC Long-Term Purchases. Estimate 23.4B.
  • 13:15 US Capacity Utilization Rate. Estimate 78.7%.
  • 13:15 US Industrial Production. Estimate 0.2%.
  • 14:00 US NAHB Housing Market. Estimate 50 points.
  • 15:00 Deutsche Bundesbank President Jens Weidmann Speaks.

*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.