EUR/USD is holding above the 1.3255 line but not going very far. Germany and France both posted strong GDP growth, and they pulled the euro-zone out of its 6 quarter recession. However, the US dollar remains strong and weakened only on soft PPI. While the euro-zone is out of recession, it isn’t out of the woods.
Here is a quick update on the technical situation, indicators, and market sentiment that moves euro/dollar.
EUR/USD Technical
- Asian session: Euro/dollar couldn’t break above 1.33 and eventually fell. to 1.3238 before climbing back above 1.3255.
Current range: 1.3255 to 1.3300.
Further levels in both directions:Â 
- Below: 1.3255, 1.3175, 1.31, 1.3050 and 1.30.
- Above: 1.33, 1.3350, 1.3415, 1.3480 and 1.3520.
- 1.3255 is providing weak support. We’ve already seen it dip to lower ground.
- 1.3415, the June peak is now strong resistance just above the round 1.34.
EUR/USD Fundamentals
- 5:30 French GDP. Exp. +0.1%, actual +0.5%. Great news helped the euro.
- 6:00 German GDP. Ep. +0.6%, actual +0.7%.
- 6:45 French Non-Farm Payrolls. Exp. 0%. actual: -0.2%.
- 9:00 Euro-zone GDP. Exp. +0.2%, actual +0.3%.
- 12:30 US PPI. Exp.+0.2, actual: +0.1%. Core PPI, exp. +0.4%, actual 0%.
For more events and lines, see the EUR/USD.
EUR/USD Sentiment
- Strong core weak periphery: Germany and France lead the euro-zone together once again. The news from France is especially encouraging. However, Italy and Spain are still in recession. Can this imbalance continue for a long time? Here are 4 reasons why the euro-zone is out of recession, but not out of the woods.
- Septaper could depend more on inflation: President of the Atlanta Fed, Denis Lockhart, said something along the lines of “employment really needs to be terrible to move the tapering decisionâ€. This is dollar positive. However, as we’ve seen previously, Bullard is worried about disinflation. The weak PPI numbers triggered a weaker dollar, even though this is a second tier figure. CPI is now in the limelight.
- Greek specter: According to a report in Der Spiegel quoting the German Bundesbank, Greece will need a third bailout program in 2014. This is hardly surprising given the IMF warnings and the 64% youth unemployment in the debt struck country, but the timing is sensitive: elections are coming in Germany on September 22nd.
- Lower volume: We are already deep into August, and trading volume has fallen. Adding the light calendar, movements could be somewhat surprising.
More technical analysis:
- EURUSD: Bearish Reversal Is Unfolding-Elliott Wave Analysis
