EUR/USD: Dollar Shrugs Off Dismal US GDP

EUR/USD is steady on Thursday, as the pair trades in the low-1.36 range in the European session. It’s been a quiet week for the euro, which has spent most of the week close to the 1.36 line. On the release front, there are no economic releases out of the Eurozone, but the markets will be keeping an eye on Brussels, which is hosting a two-day meeting of EU heads of state. In the US, today’s highlight is Unemployment Claims, with little change expected from this key indicator.

US Final GDP in Q1 was much worse than expected. The markets were braced for a decline of 1.8%, but the indicator shocked with a much sharper drop of 2.9%. There was more bad news to follow, as Core Durable Goods Orders declined by 0.1%, its first decline in five months. The estimate stood at 0.3%. Durable Goods Orders looked even worse, coming in at -1.0%, shy of the estimate of -0.1%. Despite the awful GDP, the currency markets are calm and the dollar has held its own against the euro.

In Germany, Consumer Climate looked sharp, as the key indicator jumped to 8.9 points, after spending the past four months stuck at 8.5 points. The estimate stood at 8.6 points. This strong reading comes on the heels of German Ifo Business Climate, which lost ground for a second straight month, dipping below the 110 line for the first time since December. As the largest economy in the Eurozone, German releases are closely watched by the markets, and key German data can affect the movement of EUR/USD.

Eurozone PMIs are key indicators of growth in the services and manufacturing sectors, and across the board, the May numbers were a disappointment. The German and Eurozone figures remained above the 50-point level, pointing to expansion. However, the French figures remained below the 50 mark, pointing to continuing contraction in the manufacturing and services sectors of the Eurozone’s second largest economy. A worrying trend is that with the exception of Eurozone Services PMI, all of the PMIs posted their weakest reading in 2014.

EUR/USD for Thursday, June 26, 2014

EUR/USD June 26 at 9:25 GMT

EUR/USD 1.3617 H: 1.3631 L: 1.3613

EUR/USD Technical

• The pair was steady in the Asian session and has edged lower in European trading.
• 1.3585 is an immediate support line. 1.3487 is stronger.
• 1.3649 is the next line of resistance. There is stronger resistance at 1.3786.
• Current range: 1.3585 to 1.3649

Further levels in both directions:

• Below: 1.3585, 1.3487, 1.3346 and 1.3219
• Above: 1.3649, 1.3786, 1.3893 and 1.40

OANDA’s Open Positions Ratio

EUR/USD ratio is pointing to gains in short positions on Thursday. This is consistent with the movement of the pair, as the euro has edged lower. The ratio is showing a slight majority of short positions, indicative of a slight trader bias to the US dollar continuing to move higher.

EUR/USD Fundamentals

• Day 1 – EU Economic Summit.
• 12:30 US Unemployment Claims. Estimate 314K.
• 12:30 US Core PCE Price Index. Estimate 0.2%.
• 12:30 US Personal Spending. Estimate 0.4%.
• 12:30 US Personal Income. Estimate 0.5%.
• 14:30 US Natural Gas Storage. Estimate 101B.
• 14:30 US Crude Oil Inventories. Estimate -1.2M.

*Key releases are highlighted in bold

*All release times are GMT

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