EUR/USD – Rally Continues As 1.40 Within Striking Distance

The euro rally continues, as EUR/USD is trading in the mid-1.39 range in Thursday’s European session. The surging euro is now trading at its highest levels in 2-1/2 years. In economic news, French CPI surprised the markets, posting its sharpest gain in almost a year. It’s a busy day in the US, highlighted by Retail Sales and Unemployment Claims.

The euro has been on the move since last week’s ECB meeting. ECB head Mario Draghi did not announce any moves but did say that low inflation was not a problem and the Eurozone was making a modest recovery. Are the markets buying it? Judging by the euro’s strong performance, the answer is yes. However, with the US releasing key consumer spending and employment numbers later on Thursday, the dollar could make a comeback if these releases are strong.

Tuesday’s employment numbers were not a disaster, but could have been better, and didn’t help the struggling US dollar. JOLTS Job Openings dipped to 3.97 million in February, missing the estimate of 4.02 million and slipping to a three-month low. We’ll get a look at Unemployment Claims later on Thursday, with the markets expecting the key indicator to climb after last week’s strong release. The dollar has taken a hit in the past few days, and a better than expected employment release could put the brakes on the euro’s rally.

With the US posting solid Unemployment Claims and Nonfarm Payrolls late last week, the markets can breathe more comfortably as the Fed is likely to take its scissors and trim QE next week for the third time. New York Fed President William Dudley stated last week that the threshold to alter the Fed’s program to wind up QE was “pretty high”. In other words, short of a serious economic downturn in the US economy, we can expect the QE tapers to continue.

EUR/USD for Thursday, March 13, 2014

EUR/USD March 13 at 11:20 GMT

EUR/USD 1.3952 H: 1.3966 L: 1.3897

EUR/USD Technical

• EUR/USD continues to move higher in Thursday trade. The pair posted strong gains late in the Asian session and has held steady in European trading.
• The round number of 1.40, a key level, is providing resistance. Will the pair put pressure on this line? The next line of resistance is at 1.4149.
• 1.3893 is providing support. This line has strengthened as the euro trades at higher levels. The next support level is 1.3786.
• Current range: 1.3893 to 1.40

Further levels in both directions:

• Below: 1.3893, 1.3786, 1.3649, 1.3585 and 1.3410
• Above: 1.4000, 1.4149, 1.4307 and 1.4397

OANDA’s Open Positions Ratio

EUR/USD ratio is unchanged in Thursday trading. This is not consistent with the pair’s current movement, as the euro has posted gains. Short positions retain a strong majority, indicative of trader bias towards the dollar reversing its downward movement.

The euro continues to move higher and is closing in on the key 1.40 line. EUR/USD is steady in the European session.

EUR/USD Fundamentals

• 7:45 French CPI. Estimate 0.4%. Actual 0.6%.
• 9:00 ECB Monthly Bulletin.
• 12:30 US Core Retail Sales. Estimate 0.2%.
• 12:30 US Retail Sales. Estimate 0.3%.
• 12:30 US Unemployment Claims. Estimate 334K.
• 12:30 US Import Prices. Estimate 0.6%.
• 14:00 US Business Inventories. Estimate 0.4%.
• 14:00 US Federal Reserve Governor Nomination Hearings.
• 14:30 US Natural Gas Storage. Estimate -199B.
• 17:01 US 30-year Bond Auction.
• 18:00 US Federal Budget Balance. Estimate -223.2B

*Key releases are highlighted in bold

*All release times are GMT

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