EUR/USD – Euro Gains on Fed Statement

EUR/USD continues to post gains, as the pair trades in the mid-1.36 range in Thursday’s European session. The euro has gained about 100 points since Tuesday, as the US dollar is broadly lower following the Federal Reserve policy statement, in which the central bank said that interest rates will remain at low levels. On the release front, today’s only event out of the Eurozone is a meeting of the Eurozone finance ministers. In the US, we’ll get a look at Unemployment Claims and the Philly Fed Manufacturing Index.

The Federal Reserve continued to trim its QE program, reducing the scheme by $10 billion, to $35 billion/month. If all goes as planned, the Fed could wind up QE in the fall. The Fed also hinted that interest rates will continue to stay low for the foreseeable future, which likely means that we won’t see any rate hikes before the first quarter of 2015. With regard to economic activity, the Fed noted that the recovery is continuing, but it reduced its forecast of economic growth to 2.1-2.3%, down from an earlier forecast of around 2.9 percent. The bottom line? There were no dramatic items in the Fed statement, with one analyst describing current Fed policy as “steady as she goes”. The US dollar has responded with losses against its major rivals, and the euro has added 100 points since Tuesday.

The euro is sensitive to German releases, given that Germany is the largest economy in the Eurozone, and traditionally the locomotive for the region. Earlier in the week, German ZEW Economic Sentiment, a well-respected indicator, lost ground in May, continuing the downward trend we have seen throughout 2014. The index weakened to 29.8 points, well off the estimate of 35.2 points. This was the worst reading we’ve seen since November 2012. We’ll get a look at German PPI on Friday. The manufacturing inflation indicator has struggled of late, and a small gain of 0.2% is expected.

EUR/USD for Thursday, June 19, 2014

EUR/USD June 19 at 9:00 GMT

EUR/USD 1.3637 H: 1.3643 L: 1.3585

EUR/USD Technical

• EUR/USD continues to post gains in Thursday trade. The pair pulled above the 1.36 line late in the European session.
• 1.3585 has reverted to a support role as the euro trades at higher levels. 1.3487 is a stronger support line.
• On the upside, 1.3649 is under strong pressure. Will the pair break through this line? There is stronger resistance at 1.3786.
• Current range: 1.3585 to 1.3649

Further levels in both directions:

• Below: 1.3585, 1.3487, 1.3346 and 1.3219
• Above: 1.3649, 1.3786, 1.3893 and 1.4000

OANDA’s Open Positions Ratio

EUR/USD ratio is pointing to gains in short positions on Thursday. This is not consistent with the movement of the pair, as the euro has posted gains. The ratio is close to a split of short and long positions, indicative of a lack of bias as to the future movement of EUR/USD.

EUR/USD continues to post gains on Thursday. The pair has edged higher in the European session.

EUR/USD Fundamentals

• All Day – Eurogroup Meetings.
• 12:30 US Unemployment Claims. Estimate 316K.
• 14:00 US Philly Fed Manufacturing Index. Estimate 14.3 points.
• 14:00 US CB Leading Index. Estimate 0.6%.
• 14:30 US Natural Gas Storage. Estimate 112B.

*Key releases are highlighted in bold

*All release times are GMT

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