EUR/USD Feb. 27 – Slips as US Housing Data Shines

After an uneventful week, EUR/USD lost ground on Wednesday and remains under pressure in Thursday trade. In the European session, the pair is trading in the mid-1.36 range. The dollar was broadly stronger as US New Home Sales jumped in January. In Thursday news, German Unemployment Claims beat the estimate. Over in the US, we’ll get a look at Core Durable Goods Orders and the all-important Unemployment Claims. As well, Fed Reserve head Janet Yellen testifies before the Senate.

Here is a quick update on the technical situation, indicators, and market sentiment that moves euro/dollar.

EUR/USD Technical

• EUR/USD has lost ground late in the Asian session and the pair remains under pressure in European trade.

Current range: 1.37 to 1.3773.

Further levels in both directions:  

• Below: 1.3650, 1.3580, 1.3515, 1.3450 and 1.34
• Above: 1.37, 1.3773, 1.38, 1.3830, 1.3895, 13915 and 1.40.
• On the downside, the pair is testing 1.3650. 1.3580 is stronger.
• 1.37 is the next resistance line.

EUR/USD Fundamentals

• 00:30 US FOMC Member Sandra Pianalto Speaks.
• 7:00 German Import Prices. Exp. -0.1%, actual -0.1%.
• All Day – German Preliminary CPI. Exp. 0.6%.
• 8:55 German Unemployment Change. Exp. -10K, actual -14K.
• 9:00 Eurozone M3 Money Supply. Exp. 1.1%, actual 1.2%.
• 9:00 Eurozone Private Loans. Exp. -2.2%, actual -2.2%.
• 9:00 Eurozone Spanish HPI. Exp. -1.8%.
• Tentative – Italian 10-year Bond Auction.
•  13:30 US Core Durable Goods Orders. Exp. -0.1%.
•  13:30 US Unemployment Claims. Exp. 333K.
•  13:30 US Durable Goods Orders. Exp. -0.7%.
• 15:00 Federal Chair Janet Yellen testifies before the Senate Banking Committee.
• 15:30 US Natural Gas Storage. Exp. -110B.

*All times are GMT

For more events and lines, see the Euro to dollar forecast.

EUR/USD Sentiment

• New Home Sales Sparkles: A nasty streak of weak US releases ended on Wednesday as New Home Sales jumped by 468 thousand, crushing the estimate of 406 thousand. It was the key indicator’s best showing since last June, and helped allay concerns about the health of the housing sector, following weak housing numbers last week. The markets will be looking for more good news on Thursday, as the US releases Core Durable Goods Orders and the all-important Unemployment Claims.
• Thumbs-up from German consumers: German GfK Consumer Confidence continues to rise, as the key indicator moved upwards for the fourth straight month. The indicator hit 8.5 points, its highest level since January 2007. The markets had expected another strong showing, with an estimate of 8.3 points. The excellent reading comes on the heels of German Ifo Business Climate, which also posted a multi-year high. A strong German CPI release on Thursday could push up the euro.
• ECB hints at negative rates: ECB Governing Council member Ignazio Visco said that a negative deposit rate is on the agenda in the upcoming March meeting (currently the rate is at 0%). While the ECB may not take action, this comment certainly weighed on the euro. It joins German Ifo Business Climate, which also posted a multi-year and some complaints about the euro’s strength from the head of the Eurogroup. The key to the ECB decision is the flash CPI figure for February, which will be released on Friday.
• Markets eye turmoil in the Ukraine: The Ukrainian president was practically overthrown and is fleeing an arrest warrant. He may be in Russia. With the Winter Olympic Games now over in Sochi, Russian president Putin may get involved in his neighbor’s affairs. Political, military and economic turmoil (such as a default of the Ukraine on its debt) may trigger a contagion effect and could impact on the euro.
• Federal Reserve may adjust forward guidance: Last week’s Federal Reserve minutes indicated that interest rates are unlikely to rise, even if unemployment drops to 6.5%. Previously, the Fed had said it would consider raising rates at the 6.5% threshold, but with unemployment falling faster than expected, Federal Reserve policymakers agreed that it would “soon be appropriate” to revise the Fed’s forward guidance regarding interest rate levels. Fed chair Yellen, who will testify before the Senate later on Thursday, is expected to reiterate that Fed will likely continue trimming QE, barring any downturns in the economy.

More: Video: Game changing EUR event, USD/JPY before the burst and more

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