EUR/USD has started the week quietly, as the pair trades in the mid-1.36 range in Monday’s European session. There is some nervousness in the markets following strong showings by anti-EU parties in European parliamentary elections, which took place on the weekend. It’s a very quiet day on the release front, with the US markets closed for the Memorial Day holiday. In the Eurozone, German Consumer Confidence was unchanged. ECB head Mario Draghi will speak at an ECB forum in Lisbon.
With Eurozone countries suffering from weak growth and high unemployment, voters had a chance to lash back in European parliamentary elections on the weekend, and their frustration and anger was heard loud and clear at the ballot box. Anti-EU and far-right parties in the UK, Germany and France made sweeping gains. French Prime Minister Manuel Valls called the results an “earthquake” and the elections could push down the euro, although so far the currency has remained firm.
US employment releases disappointed on Thursday. Unemployment Claims has looked sharp over the past two releases, but the short streak came to an end, as the key employment indicator climbed to 326 thousand, up from 297 thousand a week earlier. This missed the estimate of 312 thousand. With future QE tapers by the Federal Reserve contingent on solid economic data, key employment releases such as Unemployment Claims will continue to be closely scrutinized by the markets. Elsewhere, key housing data was a mix, as Existing Home Sales fell short of expectations, while New Home Sales improved sharply in April and easily beat the estimate.
The Federal Reserve minutes were released last week, and there was no dramatic response from the markets. In the minutes, policymakers discussed an exit strategy from its QE stimulus program, which is set to terminate at the end of 2014. This will likely mean an increase in interest rates, but the minutes didn’t provide a timetable as to when rates might go up, and by how much. Low inflation levels means there is less pressure on the Fed to raise rates next year, but the economic conditions could change in the meantime. The Federal Reserve remains comfortable with its accommodative stance, and will want to see stronger growth and employment numbers before making changes to monetary policy, such as raising rates.
EUR/USD for Monday, May 26, 2014
EUR/USD May 26 at 9:35 GMT
EUR/USD 1.3638 H: 1.3645 L: 1.3616
- The euro is steady in Monday trade.
- 1.3585 continues to provide support. There is stronger support at 1.3487.
- On the upside, 1.3649 is under pressure. 1.3786 is stronger.
Further levels in both directions:
- Below: 1.3585, 1.3487, 1.3346 and 1.3219
- Above: 1.3649, 1.3786, 1.3893, 1.4000 and 1.4149
OANDA’s Open Positions Ratio
EUR/USD ratio is pointing to gains in short positions in Monday trading. This is not consistent with the movement we are seeing from the pair, as the euro has edged higher. The ratio has a majority of long positions, indicative of a trader bias towards the euro posting further gains.
EUR/USD is trading quietly in the mid-1.36 range. With thin holiday trading expected, it will likely be an uneventful day for the pair.
- 6:00 GfK German Consumer Climate. Estimate 8.5 points. Actual 8.5 points.
- 8:00 ECB President Mario Draghi Speaks.
*Key releases are highlighted in bold
*All release times are GMT