EUR/USD – Euro Halts Slide At 1.38

EUR/USD has stabilized in Friday trading, following two days of losses. In Friday’s European session, the pair is trading at the 1.38 line. In economic news, Eurozone Current Account looked sharp, climbing to its highest level in almost a year. It’s a quiet day in the US, with no data releases on the schedule. FOMC member Richard Fisher will discuss forward guidance at the London School of Economics.

The Federal Reserve wrapped up its policy meeting on Wednesday, the first meeting headed by Janet Yellen. The decision to trim QE by another $10 billion was widely expected, but her comments at the follow-up press conference gave the dollar a big boost against its major rivals. Yellen said that the Fed was on track to wind up QE in the fall, and could start to raise interest rates six months later. This is a more aggressive approach towards higher rates than the markets had expected, and the dollar responded by climbing over 100 points against the euro.

German economic indicators have been one of the few bright lights in the Eurozone economy, but the German locomotive is also suffering from persistently low inflation. The German Producer Price Index came in at a flat 0.0%, short of the estimate of +0.2%. Earlier in the week, the German Wholesale Price Index posted a decline of 0.1%, its fourth drop in five releases. Mario Draghi continues to insist that there is no inflation problem in the Eurozone, but the markets may not share his optimism, as Eurozone inflation indicators continue to look listless.

Earlier in the week, German Federal Constitutional Court affirmed the legality of the European Stability Mechanism, which is the Eurozone’s bailout fund. This was an important decision, since Germany, by virtue of being the largest economy in the Eurozone, is the biggest contributor to the ESM, a fund of EUR 970 billion. In February, the same court deferred a decision on the legality of the Outright Monetary Transactions (OMR) to the European Court of Justice. Under the OMR program, the ECB purchases bonds of sovereign Eurozone members, and the OMR has been an important tool in helping keep some struggling members afloat.

EUR/USD for Friday, March 21, 2014

EUR/USD March 21 at 11:40 GMT

EUR/USD 1.3802 H: 1.3804 L: 1.3766

EUR/USD Technical

• EUR/USD has edged higher in Friday trade. The pair dropped below the 1.38 line in the European session and continues to head lower. The pair has been flirting with the 1.38 line in the European session.
• 1.3893 is providing strong resistance. This line is protecting the 1.39 level.
• 1.3786 has switched to a support role. It is a weak line and could be tested during the day. There is stronger support at 1.3649.
• Current range: 1.3786 to 1.3893

Further levels in both directions:

• Below: 1.3786, 1.3649, 1.3585, 1.3410 and 1.3335
• Above: 1.3893, 1.4000, 1.4149 and 1.4307

OANDA’s Open Positions Ratio

EUR/USD ratio has posted gains in long positions on Friday, continuing the trend we saw a day earlier. This is consistent with the pair’s current movement, as the euro has posted slight gains. Short positions retain a strong majority, indicative of trader bias towards the dollar moving higher.

The euro is steady in Friday trading. EUR/USD is steady in the European session.

EUR/USD Fundamentals

• 9:00 Eurozone Current Account. Estimate 18.4B. Actual 25.3B.
• Day 2 – EU Economic Summit.
• 15:00 Eurozone Consumer Confidence. Estimate -12 points.
• 17:45 FOMC Member Richard Fisher Speaks.
• 20:30 FOMC Member Narayana Kocherlakota Speaks.
• 22:30 FOMC Member Jeremy Stein Speaks.

*Key releases are highlighted in bold

*All release times are GMT

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