EUR/USD – Stable After Draghi Comments

EUR/USD continues to trade quietly on Tuesday. In the European session, the pair is trading in the mid-1.36 range.  There are no European economic releases on Tuesday, but the markets are keeping a close eye on ECB head Mario Draghi, who is attending an ECB forum in Lisbon. In the US, the markets are back to work after the Memorial Day long weekend. We’ll get a look at two key events later in the day – Core Durable Goods Orders and CB Consumer Confidence.

On Monday, ECB President Mario Draghi said that the ECB is concerned above deflation taking hold of the Eurozone, and reiterated that the central bank is ready to act. This was another sign that the ECB could take action at its policy meeting next month. The monetary tools available to the ECB include a reduction in interest rates, asset purchases, or liquidity injections. Any one of these moves would likely have a strong impact on EUR/USD, which has retracted somewhat since testing the 1.40 level earlier in May.

The week did not start well for the EU, as anti-EU parties posted stunning victories in European parliamentary elections held on Sunday. These “eurosceptic” parties posted strong gains across the continent, notably in France, the UK and Greece. With Eurozone countries suffering from weak growth and high unemployment, voters had a chance to lash back in the  elections, and their frustration and anger was heard loud and clear at the ballot box. French Prime Minister Manuel Valls called the results an “earthquake” and the elections could weigh on the euro, although so far the currency has remained firm.

In the US, 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.

 

EUR/USD for Tuesday, May 27, 2014

Forex Rate Graph 21/1/13

EUR/USD May 27 at 8:55 GMT

EUR/USD 1.3645 H: 1.3668 L: 1.3643

 

EUR/USD Technical

S3 S2 S1 R1 R2 R3
1.3346 1.3487 1.3585 1.3649 1.3786 1.3893

 

  • The euro is steady in Tuesday trade.
  • 1.3585 continues to provide support. There is stronger support at 1.3487.
  • On the upside, the pair is testing resistance at 1.3649. Will this line break? 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 Tuesday trading, continuing the trend we’ve seen since the start of the week. This is consistent with the movement we are seeing from the pair, as the euro has inched lower. The ratio has a majority of long positions, indicative of a trader bias towards the euro posting gains.

EUR/USD is trading quietly in the mid-1.36 range. The pair is unchanged in the European session.

 

EUR/USD Fundamentals

  • 12:30 US Core Durable Goods Orders. Estimate 0.2%.
  • 12:30 US Durable Goods Orders. Estimate -0.5%.
  • 13:00 US S&P/CS Composite-20 HPI. Estimate 11.9%.
  • 13:00 US HPI. Estimate 0.5%.
  • 13:30 ECB President Mario Draghi Speaks.
  • 13:45 US Flash Services PMI. Estimate 55.6 points.
  • 14:00 US CB Consumer Confidence. Estimate 83.2 points.
  • 14:00 US Richmond Manufacturing Index. Estimate 5 points.

*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.