EUR/USD has continued where it left off on Friday, showing little movement in Monday trading. The pair is trading in the low-1.32 range in the European session on Monday. On Friday, UoM Consumer Sentiment fell, but still beat the estimate. The markets have settled down as a US military strike against Syria has been put on hold. In the Eurozone, the new week started well as Manufacturing PMIs out of Spain, Italy and the Eurozone all beat the estimates. There are no US releases today, as the US markets are closed for the Labor Day holiday.
The markets were unsteady last week in anticipation of an expected US military strike against Syria, after a chemical attack in the war-torn country killed hundreds. The euro dropped sharply, losing about 170 points last week. However, the attempt by the US to secure a coalition ran into trouble, and President Obama said on the weekend that he will seek Congressional approval before taking any action against Syria. With Congress in recess until September 9th, a military strike could be delayed until mid-September or even later. The markets have now settled down and the euro is trading quietly as we begin a new week.
With the US markets closed on Monday, the focus is on Eurozone releases. The news was all positive as Manufacturing PMIs from Italy, Spain and the Eurozone beat the estimates. All three PMIs posted readings above the 50-point level, which indicates expansion. Eurozone Manufacturing PMI had a long run of releases below the 50 level, but has now stayed above the 50 line for two consecutive readings. Further solid data out of the Eurozone is essential for the euro to recover after sustaining sharp losses against the dollar last week.
Meanwhile, German economic data continues to cause concern in the markets. On Thursday, Unemployment Change jumped from -7 thousand in July to 7 thousand in August. The markets had expected another decline of -5K. Friday brought no relief as Retail Sales declined 1.4%, well off the estimate of a 0.5% gain. National elections are just a few weeks away, and economic problems could hurt Chancellor Angela Merkel, who is seeking a third straight term in office. No less significant is the fact that as the Eurozone’s number one economy, Germany will have to show stronger numbers if the Eurozone is to emerge from the long recession which has engulfed the continent.
When will the Federal Reserve taper QE? The Federal Reserve has not given any hints, and recent statements from Fed policymakers underscore divisions regarding the timing of such a move. What is clear is that stronger US numbers will increase the likelihood of the Fed acting sooner rather than later. This means that US releases, especially employment data, will be under the market microscope and traders should be prepared for the Fed to begin tapering at any time, which will likely bolster the US dollar.
EUR/USD for Monday, September 2, 2013
EUR/USD 1.3219 H: 1.3227 L: 1.3192
- EUR/USD is showing little movement in light trading on Monday. The pair tested the 1.32 line during the Asian session, and has edged higher in European trading.
- The pair continues to face resistance at the round number of 1.33. The next line of resistance is at 1.3410.
- On the downside, EUR/USD is receiving 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
EUR/USD ratio continues to point towards long positions on Monday. This is not currently reflected in the pair, which is showing very little movement. The ratio continues to have a solid majority of short positions, indicative of a strong trader bias towards the US dollar posting gains at the expense of the euro.
EUR/USD is trading quietly in the low-1.32 range. With the US markets closed for the Labor Day holiday, we can expect the pair to remain in a narrow range during the day.
- 7:15 Spanish Manufacturing PMI. Estimate 51.1 points. Actual 50.1 points.
- 7:45 Italian Manufacturing PMI. Estimate 50.7 points. Actual 51.3 points.
- 8:00 Italian Manufacturing PMI. Estimate 51.3 points. Actual 51.4 points.
*Key releases are highlighted in bold
*All release times are GMT
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