EUR/USD remains under pressure, as the pair has dipped below the 1.30 level in Monday’s European session. The euro continues to be weighed by the political stalemate in Italy, but the major story on Friday took place across the pond, as US lawmakers were unable to come to terms over the budget crisis, resulting in automatic spending cuts. The week is getting off to a slow start, with no US economic releases on schedule for Monday. In the Eurozone, there was good news out of Spain, as Unemployment Change fell sharply and easily beat the estimate. The markets will be keeping an eye on Brussels, where the Eurogroup finance ministers gather for their monthly meeting.
Remember the “fiscal cliff” crisis in the US just a few months ago? This episode rattled the markets and sent currencies spinning out of control early in the new year. The US budget crisis was averted but never really went away, and the newest installment is called “sequestration”. Democrats and Republicans picked up where they left off in January, failing to reach agreement and then point fingers at each other for the impasse. This past Friday, meanwhile, $85 billion in automatic spending cuts kicked in. The core issues, spending cuts and tax reforms, have not changed and continue to divide US lawmakers along party lines. Republicans want to make major cuts to federal social programs such as Medicaide, while Democrats insists on tax hikes as part of any deficit reduction plan. The negotiations are set to continue on Capitol Hill this week, as Congress tries to break the budget impasse.
Beppe Grillo, head of Italy’s Five Star Movement, was in the weekend headlines after suggesting that Italy hold a referendum on whether to remain in the Eurozone. Italy’s is staggering under a debt of two trillion euros, and Grillo has called for the country to renegotiate the debt. Grillo, who led his party to a stunning showing in last week’s election, can now play kingmaker in any coalition talks, and his anti-euro rhetoric can no longer be dismissed. The political picture remains a stalemate, and if there is no progress soon, we can expect talk of new elections in June to get louder.
EUR/USD for Monday, March 4, 2013
EUR/USD March 4 at 11:00 GMT
1.2996 H: 1.3030 L: 1.2982
EUR/USD has dipped below the all-important 1.30 level in Moday’s European session. The round number of 1.30 has seen action today, and is being tested by the pair. There is stronger resistance at 1.3080. On the downside, 1.2960 is the next line of support. This line is a weak one, and could be tested if the euro loses more ground.
Current range: 1.2960 to 1.30.
Further levels in both directions:
- Below: 1.2960, 1.2883, 1.2835, 1.2756, 1.2700 and 1.2628
- Above: 1.30, 1.3080, 1.3130, 1.3170, 1.3280, 1.3350 and 1.34
OANDA’s Open Position Ratios
The EUR/USD ratio is quiet in Monday trading. This is consistent with what we are seeing from the pair, as EUR/USD trades quietly, close to the 1.30 level. Trader sentiment remains almost evenly split as to whether the euro will undergo a correction and move upwards, or will it drop into 1.29 territory.
The euro remains under pressure from the US dollar, and is struggling to remain above the psychologically important 1.30 level. The euro continues to be weighed down by the political crisis in Italy and is now facing additional pressure due to the budget crisis in the US. We could see the pair push below the 1.30 line.
- 8:00 Spanish Unemployment Change. Exp. 77.5K. Actual 59.4K.
- All Day: Eurogoup Meetings in Brussels.
- 9:30 Eurozone Sentix Investor Confidence. Estimate -4.5 points.
- 13:00 US FOMC Member Janet Yellen Speaks.
- 18:15 US FOMC Member Jerome Powell Speaks.
*Key releases are highlighted in bold
*All release times are GMT
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