EUR/USD – Euro Lower on Disappointing German Business Climate

EUR/USD has started the new trading week with losses, as the pair trades just above the 1.13 line in Monday’s European session. It’s a quiet day on the release front, with only two events on the calendar. German Ifo Business Climate was almost unchanged at 106.7 points, but this was below the estimate of 107.4 points. In the US, today’s sole event is Existing Home Sales, with an estimate of 5.03 million.

Eurozone manufacturing numbers were a disappointment on Friday, as French and German manufacturing PMIs fell short of their estimates. French Flash Manufacturing PMI slipped to 47.7 points, short of the forecast of 49.7 points. The index has been below the 50-point level since April, pointing to ongoing contraction. The German PMI was almost unchanged at 50.0 points, but this was shy of the estimate of 51.8 points.

The Greek saga continues, as Greece and its creditors try to find some common ground on a bailout extension. Greece was granted a four-month extension on Friday, provided that the country could provide a list of “reform commitments” showing that Greece would continue to reform its economy. Greece’s creditors will review the proposals on Tuesday before giving their approval to the extension. Even if this occurs, the extension is a stop-gap measure and the bailout crisis is far from over.

Last week, the ECB took a major step aimed at improving transparency, as the central bank published a summary of its January policy meeting, the first time the Bank has done so. At the January meeting, the ECB decided that it would implement a massive QE program in March, with purchases of EUR 60 billion each month. The summary did not contain any surprises, but did note that ECB policymakers had discussed a EUR 50 billion QE scheme before deciding to set the amount at EUR 60 billion each month. The summary release puts the ECB more in line with major central banks such as the Federal Reserve and BOJ, which publish minutes of each policy meeting.

EUR/USD for Monday, February 23, 2015

EUR/USD February 23 at 11:50 GMT

EUR/USD 1.1310 H: 1.1394 L: 1.1296

EUR/USD Technical

• EUR/USD was flat in the Asian session. The pair has posted losses in the European session, breaking below support at 1.1340.
• 1.1340 has switched to a resistance role as the pair trades at lower levels. It is a weak line and could see further action during the day. 1.1426 is stronger.
• 1.1231 is an immediate support level.
• Current range: 1.1231 to 1.1340

Further levels in both directions:

• Below: 1.1231, 1.1154, 1.1066 and 1.0909
• Above: 1.1340, 1.1426, 1.1525, 1.1634 and 1.1754

OANDA’s Open Positions Ratio

EUR/USD ratio is pointing to gains in long positions on Monday. This is not consistent with the movement of the pair, as the euro has posted losses. The ratio is close to a split of long and short open positions, indicative of a lack of trader bias as to what direction EUR/USD will take next.

EUR/USD Fundamentals

• 9:00 German Ifo Business Climate. Estimate 107.4 points. Actual 106.8 points.
• 15:00 US Existing Home Sales. Estimate 5.03M.

*Key releases are highlighted in bold

*All release times are GMT

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