EUR/USD – Euro Continues to Slide on Syria Fears

The euro continues to lose ground in Thursday trading, as market uncertainty continues over a likely US strike against Syria. EUR/USD dropped below the 1.33 line in the Asian session and is trading in the low 1.32 range in European trading. In economic news, US Pending Home Sales looked weak, posting a second straight decline. There was more bad news out of Germany, as Unemployment Change was much higher than the estimate. We could see more volatility from EUR/USD during the day, as the US releases two key events – Preliminary GDP and the always important Unemployment Claims.

The markets are reacting nervously as the US appears likely to conduct a military strike against Syria, after a chemical attack in the war-torn country, apparently by the Syrian regime, killed hundreds of civilians. There are fears that a US attack could elicit a response from Syria or even Iran, so traders should expect to see volatility in the markets. There has been a report that the US may choose to strike on the weekend, which would give the markets time to adjust before opening on Monday. Meanwhile, the euro continues to lose ground and has lost close about 150 points since early Wednesday, as nervous investors dump their euros and move over to the safe-haven US dollar. 

On Wednesday, there was another poor release out of the US, as Pending Home Sales looked weak. The key housing indicator posted its second straight decline, dropping 1.3% in August. This was well off the market estimate of 0.2%. US manufacturing indicators started off the week with sharp declines, although consumer confidence looked sharp. The dollar has remained strong despite the mixed data, thanks to the crisis over Syria as well as market speculation over QE tapering.

Back in the Eurozone, German numbers have been a mixed bag this week. On Thursday, Unemployment Change faltered, jumping from -7 thousand in July to +7 thousand in August. The markets had expected another decline of -5K. German Ifo Business Climate started the week on a positive note, posting its fourth consecutive gain and climbing to its highest level in over a year. However, GfK German Consumer Climate could not keep up, as it dropped slightly from 7.0 to 6.9 points, missing the estimate of 7.1 points. Last month’s reading of 7.0 was a multi-year high, so the slight drop is unlikely to be of great concern to the markets. German consumers continue to spend, but are worried about inflation. National elections are just a few weeks away, and the economy promises to be the central issue of the campaign as Chancellor Angela Merkel seeks a third straight term in office.

Will Greece get more international aid? The country has already received two bailouts from the troika, amounting to some 240 billion euros. Despite this massive infusion of funds, Greece’s economy is still in difficult straits, and there is now talk of a third bailout. On Sunday, Greek finance minister Yannis Stournaras said that Greece was looking for another 11 billion euros in aid, but would not adopt any austerity measures in return. German Finance Minister Wolfgang Schaeuble said that the estimate of 11 billion euros was “not completely unrealistic”. However, the German government is unlikely to rubber-stamp the request, given that elections in Germany are only a few weeks away, and further aid to struggling Greece is sure to be an unpopular mood as the German electorate struggles with a weak economy at home.


EUR/USD for Thursday, August 29, 2013


Forex Rate Graph 21/1/13
EUR/USD August 29 at 10:35 GMT

EUR/USD 1.3247 H: 1.3340 L: 1.3243


EUR/USD Technical

S3 S2 S1 R1 R2 R3
1.3050 1.3100 1.3162 1.3300 1.3410 1.3476


  • EUR/USD has dropped sharply in Thursday trading. In the Asian  session, the pair crashed through the 1.33 line and consolidated at 1.3284. In European trading, the pair continues to lose ground.
  • The pair faces resistance at the round number of 1.33. The next line of resistance is at 1.3410.
  • On the downside, EUR/USD is receiving strong support at 1.3162. This line has remained firm since mid-July. This is followed by a support level at 1.3100.
  • Current range: 1.3162 to 1.3300


Further levels in both directions:

  • Below: 1.3162, 1.3100, 1.3050 and 1.3000
  • Above: 1.3300, 1.3410, 1.3476, 1.3585 and 1.3649


OANDA’s Open Positions Ratio

With the euro taking a tumble against the US dollar, the ratio is also on the move. We are seeing movement towards long positions on Thursday. This is likely a result of numerous short positions being covered by as the euro moves downward, leaving a larger percentage of open long positions. If the euro continues to lose ground, we can expect the current movement in the ratio to continue.

EUR/USD has broken out of the rangebound trading we saw early in the week, as the euro has now dropped below the 1.33 line. Will the downward trend continue? We could see further volatility from the pair during the day, as the US releases key GDP and employment numbers later on.


EUR/USD Fundamentals

  • All Day: German Preliminary CPI. Estimate 0.2%.
  • 7:55 German Unemployment Change. Estimate 7K. Actual -5K.
  • 8:10 Eurozone Retail PMI. Estimate 50.3 points.
  • Tentative: Italian 10-year Bond Auction.
  • 12:30 US Preliminary GDP. Estimate 2.2%.
  • 12:30 US Unemployment Claims. Estimate 330K.
  • 12:30 US Preliminary GDP Price Index. Estimate 0.7%.
  • 12:50 US FOMC Member James Bullard Speaks.
  • 14:30 US Natural Gas Storage. Estimate 65B.
  • 16:00 German Buba President Jens Weidmann Speaks.
  • 23:45 US FOMC Member James Bullard Speaks.


*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

Market Analyst at OANDA
A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.
Kenny Fisher

Latest posts by Kenny Fisher (see all)