EUR/USD is showing little movement in Friday trading, as the pair continues to trade in the mid-1.37 range. In economic news, US Unemployment Claims shot higher, while Retail Sales beat the estimate. On Friday, German WPI posted a decline of 0.2%. Eurozone Employment Change will be released later in the day. We’ll get a look at US inflation numbers later, with the release of PPI.
Here is a quick update on the technical situation, indicators, and market sentiment that moves euro/dollar.
EUR/USD Technical
- EUR/USD was steady in the Asian session, consolidating at 1.3755. The pair is unchanged in the European session.
- Current range: 1.3710 to 1.3800.
Further levels in both directions:
- Below: 1.3710, 1.3675, 1.3615, 1.3525, 1.3440, 1.34, 1.3320, 1.3240, 1.3175 and 1.31.
- Above: 1.3800, 1.3870, 1.3940 and 1.4036.
- 1.3710 continues to provide support. 1.3675 is next.
- 1.3800 is the next line of resistance. 1.3870 follows.
EUR/USD Fundamentals
- 7:00 German WPI. Exp. 0.4%, Actual -0.2%.
- 10:00 Eurozone Employment Change. Exp. 0.0%.
- 13:30 US PPI. Exp. 0.0%.
- 13:30 US Core CPI. Exp. 0.1%.
*All times are GMT
For more events and lines, see the Euro to dollar forecast.
EUR/USD Sentiment
- German inflation declines: German inflation continues to look weak. On Friday, WPI posted a decline of 0.2%, well below the estimate of 0.4%. The index continues to flounder and has posted declines for most of 2013. Earlier in the week, CPI, a key inflation index, posted a weak gain of 0.2%. Low inflation underscores weak growth in the German economy, which does not bode well for the Eurozone.
- Euro Industrial Production releases disappoint: Eurozone manufacturing data continues to look weak, as Eurozone Industrial Production declined 1.1% in November, its weakest showing in three months. The markets had expected a gain of 0.4%. Earlier in the week, German and French Industrial Production posted declines and were well short of their estimates. These indicators underscore weak economic activity which is hobbling the Eurozone. However, the euro has managed to shrug off weak Eurozone data, and has gained closed to 200 points since the start of December.
- European finance ministers discuss banking union: EU finance ministers met in Brussels on Tuesday and high on the agenda was a proposal for a European banking union. The aim is to relieve debt-ridden countries from the burden of rescuing failing banks in their countries. Instead, the banks would tap a Eurozone rescue fund, the Single Resolution Mechanism. However, no agreement has been reached on the SRM, and the finance ministers are likely to meet again next week to try and hammer out details of a banking union. ECB head Mario Draghi is a firm supporter of a banking union and has urged national governments to move forward with the plan.
- Markets eye Fed Meeting: Last week’s US employment numbers were excellent, but Thursday’s Unemployment Claims, the highest in nine weeks, dampened the party. The Fed has said that a stronger employment picture is a prerequisite to tapering, and the Fed will likely wait until early 2014 before taking making any moves. Still, next week’s Fed policy meeting is sure to be closely monitored by the markets. Currently, the Fed is purchasing $85 billion in assets every month, and a Fed taper will likely boost the US dollar against the major currencies.
- Negotiators reach budget agreement: With memories of the October government shutdown still fresh on Capitol Hill, Congressional negotiators have reached a budget deal which still needs to be approved by both parties. The agreement will remove the risk of a government shutdown and reduce the deficit by a modest $23 billion. Lawmakers on both sides of the political divide have voiced criticism of the proposal, but there is general agreement in Washington that the compromise reached is a positive step which removes some of the fiscal uncertainty we’ve seen in recent months. Congress must pass a budget before mid-January, or the US could face another government shutdown.
