EUR/USD is steady in Wednesday trading, as the pair was trading slightly below the 1.34 line in the European session. The markets are keeping a close eye on the Federal Reserve, which will release the minutes of its most recent policy meeting later on Wednesday. It’s a very light schedule as far as economic releases, with just two other releases out of the US – Crude Oil Inventories and Existing Home Sales. There are no European releases on Wednesday.
There has been plenty of speculation about when the Federal Reserve will scale back its QE program. Currently, the Fed is purchasing $85 billion in assets every month, and Fed chair Bernard Bernanke has indicated that the Fed plans to taper QE if the US economy continues to improve. However, Bernanke has been vague about when the Fed might act, leading to speculation and uncertainty in the markets. There has been talk about the Fed tapering QE as early as September and the FOMC minutes could shed some light on the Fed’s intentions. Since tapering QE is a dollar-positive event, any hints in the minutes about scaling back QE could boost the US dollar.
It appears that Greece will receive more aid to boost its ailing economy. Finance minister Wolfgang Schaeuble confirmed this while on an election campaign stop on Tuesday. The funds would help the Greek government deal with a funding shortfall over the next few years. Although the sums involved will be relatively small compared to previous rescue packages, another bailout will be unpopular in Germany, which faces national elections in October. As Germany is the Eurozone’s biggest economy, it ends up contributing the largest share of any bailout.
EUR/USD for Wednesday, August 21, 2013
EUR/USD 1.3386 H: 1.3400 L: 1.3327
EUR/USD is steady in Wednesday trading. The pair traded quietly in the Asian session, touching a high of 1.3427. The pair then dropped below the 1.34 line, and is currently testing resistance at this level. This is followed by stronger resistance at 1.3476.
EUR/USD is receiving support at 1.3275. The next support level is at 1.3162.
- Current range: 1.3275 to 1.3400
Further levels in both directions:
- Below: 1.3275, 1.3162, 1.3100, 1.3050 and 1.3000
- Above: 1.34, 1.3476, 1.3585 and 1.3649
OANDA’s Open Positions Ratio
Taking a look at the EUR/USD ratio, there is a very substantial majority of short positions, which outnumber long positions 3:1. This indicates a strong bias in favor of the US dollar moving higher at the expense of the euro.
EUR/USD is putting strong pressure on the 1.34 line. We could see volatility from the pair, as the US releases the FOMC minutes of its previous policy meeting.
- 14:00 US Existing Home Sales. Estimate 5.15M.
- 14:30 US Crude Oil Inventories. Estimate -1.6M.
- 18:00 US FOMC Meeting Minutes.
*Key releases are highlighted in bold
*All release times are GMT
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