EUR/USD – Steady As German Ifo Business Climate Improves

EUR/USD has posted slight gains to start off the new trading week.  Early in Monday’s European session, the pair is trading at the 1.37 line. In economic news, German Ifo Business Climate looked sharp, climbing above the 110 level. Later in the day, Deutsche Bundesbank President Jens Weidmann will speak at an event in Germany. Over in the US, today’s key event is New Home Sales. The markets are hoping to see better results than those of Existing Home Sales last week.

The week started on the right foot for Eurozone data, as German Ifo Business Climate, a key event, continues to improve. The indicator topped the 110 level, posting a reading of 110.6 points, up from 109.5 last month. This edged above the estimate of 110.2 points. Germany is the Eurozone’s largest economy, and the region will need the German locomotive to lead the way to an economic recovery.

Eurozone PMIs looked solid on Thursday, giving a big boost to the euro. French Service and Manufacturing PMIs beat the estimates, although both remain in contraction stage, under the 50-point level. German Manufacturing PMI posted a gain in December, but the Services PMI dipped lower, missing the estimate. Eurozone Services and Manufacturing PMIs both beat the estimates. There was more good news from Eurozone Current Account, which posted a surplus of 23.5 billion euros, up from 21.8 billion in November. This easily beat the estimate of 19.2 billion. These readings are welcome news, as recent Eurozone releases have not looked impressive.

Over in the US, Unemployment Claims was unchanged at 326 thousand, another strong reading for one of the most important economic indicators. This beat the estimate of 331 thousand, the third straight week that the reading has surpassed the forecast. US Existing Home Sales was unable to keep pace, however. The key indicator dropped to 4.87 million, down from 4.90M a month earlier and shy of the estimate of the 4.94 million. This was the indicator’s fourth consecutive drop, adding to concern about the health of the US housing industry. We’ll see if Monday’s New Home Sales brings better news.

EUR/USD for Monday, January 27, 2014

EUR/USD January 27 at 10:20 GMT

EUR/USD 1.3691 H: 1.3717 L: 1.3675

EUR/USD Technical

• EUR/USD is trading quietly, close to the 1.37 line.
• 1.3649 is the next support line. This is not a strong line and could face pressure during the day. This is followed by stronger support at 1.3585.
• 1.3786 is providing strong resistance. This is followed by a resistance line at 1.3893, which has remained intact since late December.
• Current range: 1.3649 to 1.3786

Further levels in both directions:

• Below: 1.3649, 1.3585, 1.3410, 1.3347 and 1.3257
• Above: 1.3786, 1.3893, 1.4000 and 1.4153

OANDA’s Open Positions Ratio

EUR/USD ratio showed strong movement towards short positions last week, indicative of stronger trader bias towards the dollar moving higher against the euro.

The euro has starts off the week at high levels, trading at the 1.37 line. We could see some movement in the North American session, with the US releasing key housing numbers.

EUR/USD Fundamentals

• 9:00 German Ifo Business Climate. Estimate 110.2 points. Actual 110.6 points.
• All Day – Eurogroup Meetings.
• 11:00 German Bundesbank Monthly Report.
• 14:00 US Flash Services PMI. Estimate 56.2 points.
• 15:00 US New Home Sales. Estimate 457K.
• 18:00 German Bundesbank President Jens Weidmann Speaks.

*Key releases are highlighted in bold

*All release times are GMT

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