EUR/USD Dec 20 â€“ Steady Ahead of Key US Releases

EUR/USDÂ is steady, as the markets await three key releases outÂ of theÂ US on Thursday. These includeÂ Unemployment Claims, Existing Home Sales, and the Philly Fed Manufacturing Index. Any unexpected readings from these releases could affect the movement of EUR/USD. The pair has shown some volatility, as it briefly broke the 1.33 line before retracting. Taking a look at other releases, German PPI declined by 0.1%, matching the forecast. Italian Retail Sales disappointed, as it declined by 1.0%, well below the estimate.Â

EUR/USD Technical

Asian session: Euro/dollar dropped as low as 1.3190, but bounced back and consolidatedÂ at 1.3220. The pairÂ hasÂ edged upwardsÂ in the European session.
Current range: 1.3170 to 1.3290.

Further levels in both directions:Â Â

Below: 1.3170, 1.3130, 1.3110, 1.3030, 1.2960, 1.2880, 1.28, 1.2750, 1.2690, 1.2624, 1.2590 and 1.25.
Above: 1.3290, 1.34, 1.3480 and 1.36.
1.3170Â continues to provideÂ support.
1.3290 is a significant resistance line.

Euro/dollarÂ steady ahead of US releasesÂ â€“ click on the graph to enlarge.

EUR/USD Fundamentals

7:00 German PPI. Exp. -0.1%. Actual -0.1%.
9:00 Italian Retail Sales. Exp. 0.0%. Actual -1.0%.
13:30 US Unemployment Claims. Exp. 358K.
13:30 US Final GDP. Exp. +2.8%.
13:30 US Final GDP Price Index. Exp. +2.7%.
14:00 Belgium NBB Business Climate. Exp. -13.1 points.
15:00 Eurozone Consumer Confidence. Exp. -26 points.
15:00 US Existing Home Sales. Exp. 4.88M.
15:00 US Philly Fed Manufacturing Index. Exp. -2.2 points.
15:00 US CB Leading Index. Exp. -0.2%.
15:00 US HPI. Exp. +0.2%.
15:30 US Natural Gas Storage. Exp. -73B.

For more events and lines, see the EUR/USD

EUR/USD Sentiment

Markets optimism fadesÂ as fiscal cliff gridlock continues: The marketsÂ have toned down their optimism overÂ the fiscal cliff negotiations, asÂ Republicans and Democrats continue to dig in and blame each other for the impasse on Capitol Hill.Â With polls indicating that a majority of Americans think that the Republicans need to be more flexible, the latter have softened their positions and their rhetoric, and are sounding more conciliatory. However, there is still a significant gap between the sides as far as tax hikes and the extent of spending cuts to Federal programs.Â The Republicans have offered tax hikes on individuals earning more than $1 million, but the Democrats want to extend these hikes to earners above $250,000. Clearly frustrated, Republican House Leader John Boehner warned that if the President Obama doesnâ€™t show more flexibility, he will be â€œresponsible for the largest tax increase in American history.â€ With the fiscal cliffÂ deadline fast approachingÂ as weÂ near the end of 2012, we could see EUR/USD show more volatility if there are no signs of progress.
Greece receives bailout funds: After months of protracted negotiations between Athens and the troika, Greece finally received the next tranche of the bailout rescue package on Monday. The Greek finance ministry confirmed that it had received 34.3 billion euros in aid. The total amount of the bailout is about 49 billion euros, and the remaining funds will be delivered by March 2013, contingent upon Greece implementing further economic reforms. Under the agreement, Greece agreed to implement a buy-back scheme, in order to help reduce its debt. This required Greece to buy its own bonds at a deep discount. The bailout package is intended to help Greece regain its financial footing, and is certainly an important step forward as the Euro-zone deals with the crippling debt crisis.
Eurozone economies sluggish: As we approach the end of 2012, the health of the economies of the major players in the Eurozone does not look promising. Unemployment is rampant in Greece and Spain, and Italy and France are also experiencing high unemployment. With these major economies facing small or even negative growth, there may not be a lot to cheer about in the early part of 2013. Germany, the economic locomotive of Europe, is in much better shape, but is suffering from slower growth and higher unemployment. On the brighter side, there has been significant progress in the Greek debt crisis, as aid is again flowing to Athens. As well, a framework has been agreed upon concerning a greater supervisory role for the ECB, with the goal of minimizing the impact of future banking crises in the Eurozone. As for the euro, it continues to trade at high levels against the dollar, despite all the economic troubles on the continent.
US dollar broad weakness continues: The Federal announcement to implement additional monetary easing resulted in a broad weakening of the US dollar, from which it has yet to recover. The euro, pound and Swiss franc have taken full advantage, and have posted impressive gains in the past week. One exception has been the Japanese yen, which has lost ground following the election win of the Liberal Democratic Party and the subsequent monetary easing by the BOJ.
US Housing Numbers Improve: The US housing sector continues to produce good numbers, another sign that the economic recovery may be gainingÂ traction.Â Building PermitsÂ improved inÂ November to 0.90 million, beating the estimate. Housing Starts reported within the market estimate. Another key housing indicator, Existing Home Sales,Â will be released later on Thursday, and the Â markets are anticipating an improvement from the previous release.