EUR/USD is trading in high range but isn’t able to break higher. Today, all eyes are on the Federal Reserve. Yellen and co. are expected to end QE but leave interest rate hike expectations lower for a long time. Worries about Germany have been sidelined as hard US data hasn’t been impressive of late. Where will EUR/USD be after the Fed?
Here’s a quick update on technicals, fundamentals and sentiment moving the pair.
- Asian session: The pair traded under 1.2750.
- Current range:Â 1.27 to 1.2750.
Further levels in both directions:
- Below: Â 1;.27, 1.2660, 1.26, 1.2570 and 1.25.
- Above: 1.2750, 1.28, 1.2850, 1.2920 and 1.30 and 1.31, which is targeted by one bank.
- 1.2750 is key resistance.
- 1.2660Â is important support.
EUR/USD Fundamentals
- During the day: German 10 year auction.
- 18:00 Fed decision. 5 reasons to dismiss the doubts about the end of QE
* All times are GMT.
For more events and lines, see the EUR/USD.
EUR/USD Sentiment
- To end QE or not to end QE: What seemed like a done deal is not necessarily so. The usually optimistic and bullish James Bullard suggested that the Fed would not end its QE program in its upcoming meeting but rather continue it due to worries about Europe. This hit the US dollar. Later on, other FOMC members, some of them quite dovish, did reaffirm the end of QE. Markets will probably be nervous towards the October 29th meeting. Inflation numbers will likely have an impact on this decision. See 5 reasons to dismiss the doubts about the end of QE.
- Weak data hurts the greenback: Durable goods orders fell below expectations and this cast a doubt on growth prospects. The poor figures joined unimpressive pending home sales. On the other hand, consumer confidence came out better than expected, but this is soft data. A comment by US Treasury Secretary Jack Lew about the strength of the US economy could serve as a hint that tomorrow’s GDP number will be strong.
- Stress tests: The ECB and the EBA released the results of very comprehensive stress tests. They showed that most banks are properly capitalized and most of those who haven’t been so at the end of 2013 have made up for it since. However, some doubt the seriousness of the tests given past failures and the fact that a scenario of deflation wasn’t taken into account. Perhaps it wasn’t taken into account because the ECB will do everything it can to prevent it.
- Weak German business confidence: The IFO joined ZEW with a weak read on German business confidence, contrasting the positive PMIs. All in all, there is still a good chance that Germany slipped into a recession.
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