EUR/USD – Calm As Markets Eye US Durable Goods

It’s been an uneventful start to the week, as EUR/USD is trading just below the 1.32 line in Tuesday’s European session. On the release front, there are no events out of the Eurozone, so the pair could take its cue from today’s key US releases, Core Durable Goods Orders and CB Consumer Confidence. Both indicators are expected to soften in July.

In the US, recent numbers have been solid, and the markets are hoping for more good news on Tuesday. Core Durable Goods Orders is expected to dip to 0.5% in July. The estimate for Durable Goods Orders stands at 7.4%, and some analysts are predicting a much higher gain in July. The reason? A huge increase in the purchase of passenger planes in July. Traders should be prepared for some short-term volatility in this indicator, which could have a positive but brief impact on the US dollar. Consumer confidence is at high levels, and CB Consumer Confidence is expected to post another strong reading.

The week started off with disappointing news out of Germany, as German Ifo Business Climate dropped to 106.3 points, its lowest reading since June 2013. Last week, German Manufacturing and Services PMIs pointed to weaker growth in July, as the largest economy in the Eurozone continues to display signs of weakness. The Euro is sensitive to key German data, and the currency will have difficulty holding its own against the dollar if German numbers fail to beat expectations.

Financial leaders and central bankers met at Jackson Hole for a conference late last week, and the markets were all ears as Fed chair Janet Yellen delivered the keynote address on Friday. Any hopes for some dramatic news were dashed, as Yellen did not provide any clues as to the timing of a rate hike. She reiterated that the US job market still needed to improve, so employment numbers remain a crucial factor in any rate move by the Fed. There is a divergence in monetary stance between the ECB and the Fed, as the Fed is winding up QE, while the ECB may be forced to provide stimulus to the prop up the sagging Eurozone economy.

 

EUR/USD for Tuesday, August 26, 2014

EUR/USD August 26 at 8:05 GMT

EUR/USD 1.3191 H: 1.3211 L: 1.3179

 

EUR/USD Technical

S3 S2 S1 R1 R2 R3
1.2984 1.3104 1.3175 1.3295 1.3346 1.3487

 

  • EUR/USD pushed higher late in the Asian session, as the pair crossed above the 1.32 line. EUR/USD has retracted in the European session.
  • 1.3175 is under strong pressure. Will the pair break through this barrier? 1.3104 is providing stronger support.
  • 1.3295 is a strong resistance line.
  • Current range: 1.3175 to 1.3295

Further levels in both directions:

  • Below: 1.3175, 1.3104, 1.2984 and 1.2904
  • Above: 1.3295, 1.3346, 1.3487 and 1.3585

 

OANDA’s Open Positions Ratio

EUR/USD ratio is almost unchanged in Tuesday trade. This is consistent with the movement of the pair, as the euro is almost unchanged. The ratio has a majority of long positions, indicative of trader bias towards the euro breaking out and heading to higher ground.

 

EUR/USD Fundamentals

  • 12:30 US Core Durable Goods Orders. Estimate 0.5%.
  • 12:30 US Durable Goods Orders. Estimate 7.4%.
  • 13:00 US HPI. Estimate 0.3%.
  • 13:00 US S&P/CS Composite-20 HPI. Estimate 8.2%.
  • 14:00 US CB Consumer Confidence. Estimate 89.1 points.
  • 14:00 US Richmond Manufacturing Index. Estimate 8 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.

short-term volatility

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.