EUR/USD continues to push higher, as the pair has posted modest gains in Monday’s European session. In economic news, UoM Consumer sentiment dropped sharply to end the week on a sour note. On Monday, Eurozone CPI releases matched the forecast. Over in the US, the markets responded negatively to the news that Lawrence Summers had withdrawn his candidacy for head of the US Federal Reserve. In Monday’s releases, Empire State Manufacturing Index dropped to a four-month low.
Bernard Bernanke will step down as head of the US Federal Reserve at the end of January, and the race to replace Bernanke has taken a dramatic twist. Former Treasury Secretary Lawrence Summers was considered the leading contender for the prestigious position. Surprisingly, Summers has withdrawn his nomination, leaving Vice Chairman Janet Yellen as the favored candidate. Yellen is considered dovish and may be hesitant when it comes to QE tapering. The dollar responded to the news of Summers’ withdrawal by losing ground against the major currencies.
US releases have run into some turbulence, and UoM Consumer Sentiment looked awful on Friday. The key indicator dropped from 80.0 points in July to 76.8 in August, its lowest level since March. This weak figure comes on the heels of weak US retail sales releases on Thursday. The new week didn’t start out much better, as Empire State Manufacturing Index, an important release, posted another sharp drop in August. The indicator fell from 8.2 points to 6.3 points. This was way off the estimate of 9.2 points. The markets are hoping that the US can get back on track on Tuesday ,with the release of Core CPI, a key event.
ECB head Mario Draghi travelled to Latvia late last week, where he spoke at the Bank of Latvia’s Economic Conference in Riga. The timing of the trip was not coincidental, as Latvia is set to join the Eurozone on January 1, 2014. The small country of under three million will be the 18th member of the Eurozone. Latvia’s economy has been doing well, but public support for adopting the euro has been weak, with fears of rising prices and Eurozone contagion.
EUR/USD for Monday, September 16, 2013
EUR/USD 1.3378 H: 1.3385 L: 1.3340
- EUR/USD continues to move to higher ground in Monday trading. The pair touched a low of 1.3340 in the European session but has recovered.
- The pair is facing resistance at 1.3410. This line could be tested if the euro continues to push higher. The next line of resistance is at 1.3476.
- On the downside, there is support at the round number of 1.33. This is followed by a support level at 1.3162.
- Current range: 1.3300 to 1.3410
Further levels in both directions:
- Below: 1.3300, 1.3162, 1.3100, 1.3050 and 1.3000
- Above: 1.3410, 1.3476, 1.3585 and 1.3649
OANDA’s Open Positions Ratio
EUR/USD ratio is pointing to movement towards short positions in Monday trading. This is not reflected in the current movement of the pair, as the euro continues to hammer away at the US dollar. The ratio continues to have a solid majority of short positions, indicative of a strong trader bias towards the US dollar reversing course and making gains at the expense of the euro.
EUR/USD continues to move higher, and is closing in on the 1.34 line. With no major US releases on Monday, we could see the pair settle down in the North American session.
- 8:00 ECB President Mario Draghi Speaks at an SME Conference in Berlin.
- 8:00 Italian Trade Balance. Estimate 4.13B. Actual 5.95B.
- 9:00 Eurozone CPI. Estimate 1.3%. Actual 1.3%.
- 9:00 Eurozone Core CPI. Estimate 1.1%. Actual 1.1%.
- 12:30 US Empire State Manufacturing Index. Estimate 9.2 points. Actual 6.3 points.
- 13:15 US Capacity Utilization Rate. Estimate 77.8%.
- 13:15 US Industrial Production. Estimate 0.5%.
*Key releases are highlighted in bold
*All release times are GMT
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