EUR/USD is holding steady above the 1.36 line, as market sentiment was positive following Friday’s Eurozone employment and PMI releases. In the US, employment numbers were a disappointment, as Non-Farm Payrolls did not meet the estimate and the unemployment rate moved higher. However, consumer sentiment and manufacturing data looked sharp. The new trading week is off to a slow start, with only four releases scheduled for Monday. Spanish Unemployment Change was up sharply, but managed to beat the estimate. Today’s sole US release is Factory Orders.
EUR/USD Technical
- Asian session: Euro/dollar lost ground, and consolidated at 1.3627. The pair has edged down in the European session, and is testing the 1.36 line.
- Current range: 1.3610 to 1.3690.
Further levels in both directions:Â Â 
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- Below: 1.3588, 1.3480, 1.34, 1.3360, 1.3290, 1.3255Â and 1.3170, 1.3130, 1.3110, 1.3030, 1.30 and 1.2960.
- Above: 1.3690, 1.3740, and 1.3860, 1.3915 and 1.40.
- 1.3588 is a key line on the downside. 1.3480 is stronger.
- On the upside, 1.3690 continues to provide strong resistance.
Euro/dollar steady after positive Eurozone data – click on the graph to enlarge.
EUR/USD Fundamentals
- 8:00 Spanish Unemployment Change. Exp. 150.0K. Actual 132.1K.
- 9:30 Eurozone Sentix Investor Confidence. Exp. -2.2 points. Actual -3.9 points.
- 10:00 Eurozone PPI. Exp. -0.2%.
- 15:00 US Factory Orders. Exp. 2.3%.
For more events and lines, see the EUR/USD
EUR/USD Sentiment
- Markets cheer postive Eurozone data: The Eurozone wrapped up the trading week on a solid note. The highlight was the Eurozone Unemployment Rate which dipped to 11.7%, beating the forecast of 11.9%. Spanish, Italian and Eurozone Manufacturing PMIs were all slightly above the estimate, although all three remain below the 50 point threshold, indicating contraction in the manufacturing sector. The euro continues to trade above the 1.36 line, as there is positive market sentiment that the Eurozone may have turned the corner and the worst is now behind us. However, many economic indicators point to ongoing weakness in the economy, and an unemployment rate close to 12% will not win any accolades. Still, there is a sense of optimism, and that sentiment can certainly be a market-mover.
- More of a mix from US numbers: The US continues to keep the markets guessing about the extent of the US recovery. Last week produced more mixed data. GDP was a major disappointment, as the economy contracted for the first time since 2009. Employment numbers lost their recent shine, as NFP and Unemployment Claims failed to meet expectations, and the unemployment rate inched up to 7.9%. On the bright side, last week’s consumer sentiment and manufacturing PMI data was very strong. consumer sentiment and manufacturing PMI data was very strong With only a handful of key US releases this week, each one will find itself under the market microscope as the markets try to get a handle on where the US economy is headed.
- Fed maintains course: The US Federal Reserve was in the spotlight last week, as the powerful US central bank met for a two-day policy meeting. There were no surprise developments, as the Fed stated it would continue its open-ended QE3 program until the outlook for the labor market “improves substantiallyâ€. The Fed noted that economic growth had stalled, but was confident that the pause was a temporary one. This laid to rest speculation that the current round of QE, under which the Fed is purchasing $85 billion a month in securities, might be terminated anytime soon. The Fed maintained its ultra-low benchmark interest rate, saying there would be no change until unemployment drops below 6.5%. With US unemployment close to 8%, we will likely be hearing this refrain for the foreseeable future.
- Is Germany back on track?: The German locomotive will have to shift into high gear if the Eurozone economy is to get back on its feet in 2013. Although German economic indicators have been mixed, market sentiment has risen after some outstanding data. Last week, ZEW Consumer Sentiment shot up to its best level in almost three years, and last week’s Unemployment Claims dropped sharply. These positive releases have played a major role in the meteoric rise of the euro in the past few weeks. The markets will be carefully monitoring German manufacturing data, which will be released later this week. As goes Germany, so does Europe, and the markets will be hoping that the positive German releases will be reflected in other Eurozone indicators as well.
