EUR/USD – Euro Slightly Lower Ahead of US Housing Data

EUR/USD has edged lower as we begin the new trading week. The pair is trading in the low-1.35 range in Monday’s European session. It’s a slow start to the week, with just one release out of the US, Pending Homes Sales. The markets are expecting a gain after four consecutive declines from the key housing indicator. There are no releases out of the Eurozone on Monday.

On Thursday, there was positive news on the US employment front, as Unemployment Claims dropped to 323 thousand, a seven-week low. This was well below the estimate of 333 thousand. The strong figure will likely increase speculation as to when the Fed will step in and taper QE, although such a dramatic move is not considered likely before early 2014.

German data continues to improve, and Ifo Business Climate wrapped up the week on a high note. The indicator jumped to 109.3 points in October, up from 107.4 a month earlier. As well, German PMIs pointed to continuing expansion in the services and manufacturing sectors. However, other members in the Eurozone are lagging behind Germany, and record low interest rates from the ECB has not boosted inflation or economic growth in the region.

With inflation stuck at low levels despite recent rate cuts, the ECB is considering cutting the deposit rate, which currently stands at 0.0%. However, a move into negative territory would represent unchartered territory and could have negative consequences for the economy. So if the ECB does go ahead and reduce the deposit rate, we could see a “mini cut” of less than 0.25%. The OECD has also expressed concern about the dangers of deflation in the Eurozone and is urging the ECB to consider implementing quantitative easing. QE represents an important tool in the arsenals of central banks such as the Federal Reserve and the Bank of England.

EUR/USD for Monday, November 25, 2013

EUR/USD November 25 at 12:05 GMT

EUR/USD 1.3523 H: 1.3556 L: 1.3508

EUR/USD Technical

• EUR/USD has edged lower in Monday’s European session. The pair edged lower in the Asian session and the euro remains under pressure in European trading.
• On the downside, the round number of 1.3500 continues to provide support. This is a weak line which face strong pressure during the day. This is followed by a support line at 1.3410.
• The pair is facing resistance at 1.3585. Next, there is resistance at 1.3649, which has been remained intact since late October.
• Current range: 1.3500 to 1.3585

Further levels in both directions:

• Below: 1.3500, 1.3410, 1.3325, 1.3265 and 1.3149
• Above: 1.3585, 1.3649, 1.3786 and 1.3893

OANDA’s Open Positions Ratio

EUR/USD ratio is pointing to gains in short positions in Monday trading, continuing the trend we saw on Friday. This is reflected in the pair’s movement, as the euro has posted slight losses against the dollar. A large majority of the open positions remain short, indicative of a trader bias towards the dollar continuing to post gains against the euro.

The pair is trading quietly in the low-1.35 range. With the US releasing key housing numbers on Monday, we could see some volatility from the pair if the reading is not in line with market expectations.

EUR/USD Fundamentals

15:00 US Pending Home Sales. Exp. 2.2%

*Key releases are highlighted in bold

*All release times are GMT

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