After a strong finish for 2013, EUR/USD started 2014 with a slide and broke below long term downtrend support. The flows that pushed the euro higher are now turning against it. The latest European data came out as expected, and now markets await figures from the US, including the first hint for the Non-Farm Payrolls.
Here is a quick update on the technical situation, indicators, and market sentiment that moves euro/dollar.
EUR/USD Technical
- EUR/USD couldn’t move above 1.3775 and began sliding, eventually losing the 1.3710 line.
Current range: 1.3710 to 1.3800.
Further levels in both directions:
- Below:  1.3675, 1.3615, 1.3525, 1.3440, 1.34, 1.3320, 1.3240, 1.3175 and 1.31.
- Above: 1.3710, 1.3800, 1.3832, 1.3940 and 1.4036.
- 1.3710 is providing weak resistance. 1.3800 follows.
- 1.3675 is stronger is now the critical support.
- Long term uptrend support lost: As the chart shows, EUR/USD is trading along an uptrend support line from early November. The move lower is a clear break of this line.
EUR/USD Fundamentals
- Spanish Manufacturing PMI: Exp. 49.9, actual 50.8 points.
- Italian Manufacturing PMI: Exp. 51.8, actual 53.3 points.
- 9:00 Euro-zone Final Manufacturing PMI. Exp. 52.7. actual: 52.7 points.
- 13:30 US jobless claims. Exp. 334K.
- 15:00 USÂ ISM Manufacturing PMI: exp. 56.8 points. See how to trade the figure with EUR/USD.
- 15:00 USÂ Construction Spending. Exp. +0.7%.
For more events and lines, see the Euro to dollar forecast.
EUR/USD Sentiment
- Flows now turning against the euro: The flows towards the end of the year went in favor of the euro and against the dollar. But as the excess liquidity needs to find a way, the flows are now changing direction. We will probably see stability only next week, when the vacation is really over.
- Euro gets a new member: Latvia is the 18th country to join the euro-zone. The move is done despite popular disapproval. Nevertheless, the currency was already pegged to the euro for a long time. 333 million people are now using the common currency.
- Gearing up for the Non-Farm Payrolls: the ISM figure is the first hint towards the last jobs report of 2013. The NFP can impact the next Fed decision, after 2013 ended with QE tapering. While it was small, the Fed did indeed change policy.
- Dollar bullishness in 2014?: Many analysts see the dollar strengthening in 2014, but the euro is certainly expected to give a fight. Here is one outlook: 2014 – Conditional Dollar Strength
