EUR/USD June 14 – Limited Movement as Eurozone Inflation

EUR/USD is showing limited movement, as the pair trades in the low-1.33 range in Friday’s European session. The pair shrugged off strong US retail sales and unemployment numbers on Thursday. Inflation data is on the minds of the markets, as Eurozone CPI and Core CPI matched expectations. The US wraps up the week with two key releases – PPI and Preliminary UoM Consumer Sentiment.

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

EUR/USD Technical

• Asian session: Euro/dollar moved upwards, touching a high of 1.3378. The pair then edged lower, and consolidated at 1.3344. Euro/dollar is unchanged in the European session.

Current range: 1.3306 – 1.3350.

Further levels in both directions:

<img alt=”EUR USD Daily Forecast June 13″ src=”http://forexcrunch.wpengine.netdna-cdn.com/wp-content/uploads/2013/06/EUR-USD-Daily-Forecast-June-13-350×196.png” width=”350″ height=”196″ /> 

<img alt=”EUR USD Daily Forecast June 11″ src=”https://forexcrunch-wpengine.netdna-ssl.com/wp-content/uploads/2013/06/EUR-USD-Daily-Forecast-June-11-350×196.png” width=”350″ height=”196″ />
<img alt=”EUR USD Daily Forecast June 10th” src=”https://forexcrunch-wpengine.netdna-ssl.com/wp-content/uploads/2013/06/EUR-USD-Daily-Forecast-June-10th-350×196.png” width=”350″ height=”196″ />
<img alt=”EUR USD Daily Forecast June 7″ src=”https://forexcrunch-wpengine.netdna-ssl.com/wp-content/uploads/2013/06/EUR-USD-Daily-Forecast-June-7-350×196.png” width=”350″ height=”196″ />
<img alt=”EUR USD Daily Forecast June 6″ src=”https://forexcrunch-wpengine.netdna-ssl.com/wp-content/uploads/2013/06/EUR-USD-Daily-Forecast-June-6-350×196.png” width=”350″ height=”196″ />
<img alt=”EUR USD Daily Forecast June 4″ src=”https://forexcrunch-wpengine.netdna-ssl.com/wp-content/uploads/2013/06/EUR-USD-Daily-Forecast-June-4-350×196.png” width=”350″ height=”196″ />
<img alt=”EUR USD Daily Forecast May31″ src=”https://forexcrunch-wpengine.netdna-ssl.com/wp-content/uploads/2013/05/EUR-USD-Daily-Forecast-May31-350×196.png” width=”350″ height=”196″ />
<img alt=”EUR USD Daily Forecast May30″ src=”https://forexcrunch-wpengine.netdna-ssl.com/wp-content/uploads/2013/05/EUR-USD-Daily-Forecast-May30-350×196.png” width=”350″ height=”196″ />
<img alt=”EUR USD Daily Forecast May29″ src=”https://forexcrunch-wpengine.netdna-ssl.com/wp-content/uploads/2013/05/EUR-USD-Daily-Forecast-May29-350×196.png” width=”350″ height=”196″ />
<img alt=”EUR USD Daily Forecast May28″ src=”https://forexcrunch-wpengine.netdna-ssl.com/wp-content/uploads/2013/05/EUR-USD-Daily-Forecast-May28-350×196.png” width=”350″ height=”196″ />
<img alt=”EUR USD Daily Forecast May27″ src=”https://forexcrunch-wpengine.netdna-ssl.com/wp-content/uploads/2013/05/EUR-USD-Daily-Forecast-May271-350×196.png” width=”350″ height=”196″ />

• Below: 1.3306, 1.3255, 1.32, 1.3160, 1.31, 1.3050, 1.30, 1.2940, 1.2890, 1.2840, 1.28, 1.2750 and 1.27.
• Above: 1.3350, 1.34, 1.3480, 1.3580 and 1.3710.
• 1.3306 continues to provide support. This is followed by 1.3255.
• On the upside, the pair is again testing 1.3350. The round number of 1.34 is next.

Euro trading in low-1.33 range  as Eurozone inflation numbers as expected – click on the graph to enlarge.

EUR/USD Fundamentals

• 9:00 Eurozone CPI. Exp. 1.4%. Actual 1.4%.
• 9:00 Eurozone Core CPI. Exp. 1.2%. Actual 1.2%.
• 9:00 Eurozone Employment Change. Exp. -0.2%.
• 12:30 US PPI. Exp. 0.1%.
• 12:30 US Core PPI. Exp. 0.1%.
• 12:30 US Current Account. Exp. 110B.
• 13:00 US TIC Long-Term Purchases. Exp. 35.0B.
• 13:15 US Capacity Utilization Rate. Exp. 77.9%.
• 13:15 US Industrial Production. Exp. 0.3%.
• 13:55 US Preliminary UoM Consumer Sentiment. Exp. 84.9 points. See how to trade this event with EUR/USD.
• 13:55 US Preliminary UoM Inflation Expectations.

For more events and lines, see the EUR/USD

EUR/USD Sentiment

• Eurozone Inflation Numbers as Expected: Eurozone inflation numbers have not been strong, pointing to a weak economy. This was one factor in the recent ECB reduction cut, in order to encourage more spending. On Friday, Eurozone inflation numbers matched the forecast. Eurozone CPI came in at 1.4%, and Core CPI gained 1.2%. The good news is that both indexes improved from the previous reading. We’ll get a look at US inflation numbers later on Friday, with the release of PPI, a key event.
• Euro ignores key US releases: There were three major US releases on Thursday, but surprisingly, there was very little reaction from the euro. The news out of the US was positive. Retail Sales jumped from 0.1% to 0.6%, surpassing the estimate of 0.4%. Core Retail Sales also climbed nicely, from -0.1% to 0.3%. This matched the market forecast.  There was more good news as Unemployment Claims fell to 334 thousand, crushing the estimate of 354 thousand. These solid readings will likely increase expectations that the Fed will scale down its current QE program.  With QE being dollar-negative, any tapering of QE could give a boost to the greenback against the other major currencies.
• German Court Reviews OMT: On Wednesday, the German Constitutional Court wrapped up a hearing on the ECB’s OMT (Outright Monetary Transactions) program. OMT is a rescue program which enables the ECB to buy bonds from Eurozone members whose economies are struggling. It’s turned into a case between the ECB and the German Bundesbank, as the ECB board member Joerg Asmussen defended the program in front of the court, while Jens Weidmann, head of the Bundesbank, attacked the OMT. It should be noted that the ECB has never purchased any bonds under the scheme. What can we expect from the Court? In previous cases involving the legality of ECB rescue packages, the German court has given its approval, but has not hesitated to add conditions. So we can expect the court to give the nod to OMT, although there could some strings attached. A ruling in the matter is not expected until September, after German elections.
• IMF admits mistakes in Greek bailout: In an interesting development, the IMF admitted mishandling the Greek bailout program, in which Greece received 240 billion euros. The IMF said it failed to deal with private debt restructuring properly and overestimated the capacity of Greek governments to push through tough economic reforms. The IMF also pointed fingers at the EU for “notable mistakes”. For its part, Greece said that the IMF report would not lead to any changes as the country continues to work towards meeting its deficit reduction targets under the bailout program.
• Will S&P upgrade affect QE?: The S&P ratings agency revised its US rating from negative to stable, which means that another downgrade in the next two years has less than a 33% chance of occurring. The agency said that a key factor in its decision was the agreement reached in Congress to avoid the fiscal cliff, which would have resulted in $600 billion in tax increases and spending cuts, and could have pushed the US economy into recession. Back in 2011, S&P cut the US credit rating from AAA to AA, and the threat of another downgrade has been hanging over the markets since then. So this development will improve market sentiment and could give a boost to the US dollar. The S&P decision could also affect the US Federal Reserve’s QE program. The Fed has said that it won’t wind up the program before it sees a stronger recovery and an improved labor market. Although US releases have been a mixed bag, speculation is rising that the Fed could take action in the next few months.

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