EUR/USD is very quiet in Tuesday trading, as the pair trades just shy of the 1.35 line in the European session. In economic news, German ZEW Economic Sentiment matched the market forecast, but Eurozone ZEW Economic Sentiment fell short of the estimate. In the US, it’s another quiet day, with just one data release. Today’s highlights include speeches by US Treasury Jack Lew and two FOMC members.
Eurozone numbers continue to point in all directions, making it difficult to predict what direction the euro might take. German ZEW Economic Sentiment, a key event, continues to climb and came in at 54.6 points in October, matching the estimate. This was the indicators best showing in four years. The Eurozone ZEW Economic Sentiment also improved last month, crossing above the 60-level as it reached 60.2 points. However, this was well short of the estimate of 63.1 points. The euro shrugged off these numbers and continues to trade close to the 1.35 line.
Eurozone Current Account was dreadful in October, as the surplus dropped to 13.7 billion euros, compared to 17.4 billion in the previous release. This was well short of the estimate of 18.3 billion. Current Account is closely linked to currency demand, with a smaller surplus indicative of decreased purchases of euros by foreigners for Eurozone goods and services. So, this weak reading could spell trouble for the euro.
Taking a look at the US, Federal Reserve chair-elect Janet Yellen testified last week before the powerful Senate Banking Committee. Yellen has been an ardent supporter of QE, and told the committee that the present level of asset purchases should continue until growth improves and unemployment falls. She said that the labor market and economy are performing “far short of their potential”, but added that she expects inflation to remain below the Fed’s target of 2%. Yellen, who is slated to become the first woman to head the Federal Reserve, will take over from Bernard Bernanke in January.
Speculation continues on a daily basis as to when the Fed will scale back its QE program, yet we continue to see low volatility in the markets. What gives? The lack of activity could mean one of two things – either the markets are not expecting a taper in the near future, or they are prepared for a reduction should the Fed press the taper trigger. EUR/USD continues to show little movement, and last week the one-month implied volatility on the pair posted its lowest reading since 2007. Of course, things can change quickly in the currency markets, but for now, the EUR/USD waters remain calm.
EUR/USD for Tuesday, November 19, 2013
EUR/USD November 19 at 12:20 GMT
EUR/USD 1.3496 H: 1.3543 L: 1.3488
- EUR/USD is steady in Tuesday trading. The pair continues to trade close to the 1.35 line.
- On the downside, 1.3410 is providing support. This is followed by a support level at 1.3325.
- The pair is testing resistance at the round number of 1.35. This line has been busy and could see further activity during the day. 1.3585 is providing stronger support.
- Current range: 1.3410 to 1.3500
Further levels in both directions:
- Below: 1.3410, 1.3325, 1.3265 and 1.3149
- Above: 1.3500, 1.3585, 1.3649, 1.3786 and 1.3893
OANDA’s Open Positions Ratio
EUR/USD ratio is unchanged in Tuesday trading. This is reflected in the pair’s movement, which is showing little movement. A large majority of the open positions remain short, indicative of a trader bias towards the dollar posting gains against the euro.
It’s been a quiet start to the week for the euro, which is trading close to the 1.35 line. With no key events in the US on Tuesday, we could see the pair continue to trade quietly during the day.
- 10:00 German ZEW Economic Sentiment. Estimate 54.6 points. Actual 54.6 points.
- 10:00 Eurozone ZEW Economic Sentiment. Estimate 63.1 points. Actual 60.2 points.
- 13:30 US Employment Cost. Estimate 0.5%.
- 13:45 US Treasury Secretary Jack Lew Speaks.
- 15:00 FOMC Member William Dudley Speaks.
- 19:15 FOMC Member Charles Evans Speaks.
- 20:00 President Barack Obama Speaks.
*Key releases are highlighted in bold
*All release times are GMT
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