After some volatility during the week, EUR/USD is showing little activity on Wednesday. In the European session, the pair is trading in the mid-1.25 range. On the release front, Eurozone Current Account was unexpectedly strong, posting a surplus as EUR 30.0B. In the US, we’ll get a look at important housing data, with the release of Building Permits and Housing Starts. The markets are expecting a slight improvement from both indicators. As well, the Federal Reserve will release the minutes of its October policy meeting.
Despite the stagnant Eurozone economy, German investor confidence soared in November, as ZEW Economic Sentiment rose to 11.5 points, compared to -3.6 points in the previous release. This crushed the forecast of 0.9 points and marked a 4-month high for the key indicator. It was a similar story with Eurozone ZEW Economic Sentiment, which jumped to 11.0 points, easily beating the estimate of 4.3 points. The thumbs-up from investor confidence followed the news that Germany had avoided a recession with a small 0.1% gain in GDP in Q3.
ECB head Mario Draghi and his colleagues are under strong pressure to “do something” to kick-start the weak Eurozone economy. Deep interest rate cuts haven’t had much effect, so the ECB has purchased covered bonds and asset-backed securities. So far, these securities have been from the private sector, and the ECB could decide to expand these purchases to government bonds, known has quantitative easing. However, there is resistance to quantitative easing from national central banks, such as the powerful Bundesbank. Speaking before a European parliamentary committee on Monday, Draghi said that further stimulus measures could include government bonds. If the ECB does move forward with quantitative easing, we could see the wobbly euro lose more ground.
EUR/USD for Wednesday, November 19, 2014
EUR/USD November 19 11:20 GMT
EUR/USD 1.2541 H: 1.2548 L: 1.2412
- EUR/USD tested support at 1.2518 in the Asian session. The pair is steady in European trade.
- 1.2518 is a weak support line. 1.2407 is stronger.
- 1.2688 is a strong resistance line.
- Current range: 1.2518 to 1.2688
Further levels in both directions:
- Below: 1.2518, 1.2407, 1.2286, 1.2143 and 1.2042
- Above: 1.2688, 1.2806, 1.2905 and 1.2995
OANDA’s Open Positions Ratio
EUR/USD ratio is pointing to gains in short positions on Wednesday, reversing the direction we saw a day earlier. This is not consistent with the pair’s movement, as the euro has shown little change. The ratio remains close to a split of short and long positions, indicative of a lack of trader bias regarding EUR/USD.
- 9:00 Eurozone Current Account. Estimate 21.3B Actual 30.0B.
- 13:30 US Building Permits. Estimate 1.04M.
- 13:30 US Housing Starts. Estimate 1.03M.
- 15:30 US Crude Oil Inventories. Estimate -0.7M.
- 19:00 US FOMC Meeting Minutes.
*Key releases are highlighted in bold.
*All release times are GMT