EUR/USD has edged higher in Friday trading, as the pair moved back above the pivotal 1.30 level. The EU Economic Summit continues and the Eurogroup Finance Ministers are also meeting today. The markets are waiting for the release of Eurozone inflation numbers. The trading week wraps up with a string of US data, including two major releases – Core CPI and UoM Consumer Sentiment.
Here is a quick update on the technical situation, indicators, and market sentiment that moves euro/dollar.
EUR/USD Technical
- Asian session: Euro/dollar moved higher, and touched a high of 1.3041. The pair consolidated at 1.3035. The pair has edged lower in the European session.
- Current range: 1.2880 to 1.2960.
Further levels in both directions:Â 
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- Below: 1.3000, 1.2960, 1.2880, 1.2805, 1.2746, 1.27, 1.2660 and 1.2587.
- Above: 1.3030, 1.3100, 1.3130, 1.3170, 1.3255, 1.3290, 1.3350, 1.34, 1.3486 and 1.3588.
- Â 1.30 is a weak support level. 1.2960 is stronger.
- 1.3030 is now providing weak resistance. The next resistance line is at 1.31.
Euro/dollar struggles to remain above 1.30 line – click on the graph to enlarge.
EUR/USD Fundamentals
- Day 2: EU Economic Summit
- All Day: Eurogroup Meetings
- 10:00 Eurozone CPI. Exp. 1.8%. Actual 1.8%
- 10:00 Eurozone Core CPI. Exp. 1.3%. Actual 1.3%
- 12:30 US Core CPI. Exp. 0.2%
- 12:30 US CPI. Exp. 0.2%
- 12:30 USÂ Empire State Manufacturing Index. Â Exp. 9.8 points.
- 13:00 US TIC Long-Term Purchases. Exp. 39.3B
- 13:15 US Capacity Utilization Rate. Exp. 79.4%
- 13:15 US Industrial Production. Exp. 0.4%
- 13:55 US Preliminary UoM Consumer Sentiment. Exp. 78.2 points
- 13:55 US Preliminary UoM Inflation Expectations
For more events and lines, see the EUR/USD
EUR/USD Sentiment
- US numbers on a roll: We are used to seeing mixed data out of the US, sometimes even from the same sector of the economy. However, recent numbers have looked very good. The markets have reacted with a thumbs up, and this has helped the dollar post gains against the struggling euro. Unemployment claims continue to fall and and retail sales were sharp. No less important, positive indicators can be found in other sectors as well, as Import Prices, Business Inventories and Crude Oil Inventories all beat their respective estimates. Has the US recovery entered a new phase? The markets will be hoping that the week ends on a bright note, as the US releases UoM Consumer Sentiment and Core CPI.
- Is ECB considering a rate cut?: Although the ECB did not lower interest rates last week, the vote was not unanimous, and the ECB has not ruled out trimming rates later this year. The markets jumped on comments by Jens Weidmann, a senior ECB official, who said that inflationary pressures were receding in the Eurozone. Was this a hint that the ECB might lower interest rates soon? The ECB would prefer that the bloc show some signs of recovery without the ECB having to lower interest rates, which are already at record-low levels. However, economic indicators from the Eurozone have not looked sharp, and this has fueled speculation of a possible interest cuts, which is weighing on the euro.
- Draghi optimistic, markets less so: ECB head Mario Draghi has all but guaranteed that the Eurozone economy will turn around later this year, but the markets are more skeptical. Eurozone numbers continue to look sluggish, and speculation continues that the ECB may pull the trigger and reduce interest rates. There was bad news, as the Fitch ratings agency downgraded the debts of Italy and Spain, as well as Belgium, Cyprus, and Slovenia. The euro will have a tough time trying to gain ground if market sentiment about the Eurozone economy does not improve.
- Italian Political Deadlock Continues: The political stalemate which has paralyzed Italy for several weeks continues, and the Italian Parliament meets on Friday to try and sort out the mess. Most Italians oppose another election, but so far, the political leaders have not made any headway as far as forming a new government. The financial markets remain skeptical, and Italy’s three-year borrowing costs rose to their highest since December at an auction earlier this week. This comes on the heels of a credit downgrade by Fitch. Italy is struggling with a massive debt of 1.9 trillion euros and weak growth, and needs to quickly get a government up and running.
