EUR/USD – Euro Improves After Fed Minutes

EUR/USD continues to move higher, as the pair trades in the mid-1.38 range. The euro has now jumped about 160 points this week. In economic news, the Federal Reserve minutes showed that policymakers discussed interest rate levels but did not reach any decisions. In the Eurozone, French and Italian Industrial Production numbers fell short of their estimates. Today’s highlight is US Unemployment Claims. The markets are expecting an improvement in the upcoming reading.

Anyone looking for exciting news from the Federal Reserve minutes was disappointed. Policymakers expressed concern about speculation over a possible rise in interest rates, but didn’t say when the central bank might change its current monetary policy. Under its QE program, the Fed is purchasing $55 billion in assets every month. There have been three tapers to QE so far, and the Fed chair Janet Yellen has said that the Fed plans to wind up QE late in the year. However, if there are any setbacks on the inflation or employment fronts, the Fed could be forced to delay further tapers. As the tapers are dollar-positive, any delay would be bearish for the greenback.

It was more of the same from the ECB last week, as the central bank stood pat and did not make any moves, despite serious worries about weak growth and low inflation. On Tuesday, ECB policymaker Yves Mersch said that ECB officials were working on a QE scheme in order to combat deflationary pressures, but added that there was no immediate need for such a program. Meanwhile, Bundesbank President Jens Weidmann said that monetary policy alone will not solve the Eurozone’s economic problems, saying that political leaders must undertake fiscal and other reforms.

Tensions between the US and Russia continue to worsen over the Ukraine. On Monday, pro-Russian demonstrators took over a government building in an industrial city in the east of the country and declared their independence. Russia has warned the Ukraine not to react with force, while the US has accused Russia of continuing to foment unrest in the Ukraine ahead of elections in May. With the country split down the middle between pro-Western and pro-Russian camps, we could see the turmoil continue.

 

EUR/USD for Thursday, April 10, 2014

Forex Rate Graph 21/1/13

EUR/USD April 10 at 9:45 GMT

EUR/USD 1.3865 H: 1.3871 L: 1.3836

 

EUR/USD Technical

S3 S2 S1 R1 R2 R3
1.3585 1.3649 1.3786 1.3893 1.4000 1.4149

 

  • EUR/USD showed little movement in the Asian session, but has posted slight gains in European trading.
  • 1.3786 continues to provide support. 1.3649 is the next support level.
  • On the upside, 1.3893 has weakened after the euro’s strong gains. Will the pair break above this line? The next resistance line is at the key level of 1.40.
  • 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 is pointing to gains in short positions on Thursday, reversing the direction seen a day earlier. This is not consistent with the pair’s current movement, as the euro has edged upwards. Short positions retain a strong majority, indicative of trader bias towards the dollar reversing its current direction and moving higher.

EUR/USD continues to point upwards on Thursday. The pair has posted modest gains in the European session.

 

EUR/USD Fundamentals

  • 6:45 French Industrial Production. Estimate 0.2%. Actual 0.1%.
  • 6:45 French CPI. Estimate 0.6%. Actual 0.4%.
  • 8:00 ECB Monthly Bulletin.
  • 8:00 Italian Industrial Production. Estimate 0.2%. Actual 0.1%.
  • 12:30 US Unemployment Claims. Estimate 314K.
  • 12:30 US Import Prices. Estimate 0.2%.
  • 14:30 US Natural Gas Storage. Estimate 15B.
  • 17:01 US 30-year Bond Auction.
  • 18:00 US Federal Budget Balance. Estimate -76.5B.

*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.