EUR/USD March 18 – Stable As German, Eurozone Economic

EUR/USD remains steady on Tuesday, as the pair trades slightly above the 1.39 line in the European session. The markets are following fast-moving events in the Ukraine, as Crimea has voted to join Russia and the EU and the US have responded with limited sanctions. Turning to economic news, German ZEW Economic Sentiment looked awful, sliding to a ten-month low. The Eurozone indicator also slipped badly. As well, the German Constitutional Court confirmed the legality of the European Stability Mechanism. In the US, there are two major events on the schedule – Core CPI and Building Permits.

Here is a quick update on the technical situation, indicators, and market sentiment that moves euro/dollar.

EUR/USD Technical

• EUR/USD lost ground late in the Asian session and the pair continues to edge lower towards the 1.39 line in European trading.

Current range: 1.3895 to 1.3940.

Further levels in both directions: 

• Below: 1.3894, 1.3830, 1.3773, 1.37, 1.3650 and 1.3560.
• Above: 1.3940, 1.40, 1.4149 and 1.4307.
• 1.3940 is the next resistance line.
• 1.3894 is providing weak support.1.3830 follows.

EUR/USD Fundamentals

• 7:00 German WPI. Exp. +0.2%, actual -0.1%.
•  9:00 Italian Trade Balance. Exp. 2.47B, actual 0.37B.
• 9:15 German Constitutional Court Ruling on ESM.
• 10:00 German ZEW Economic Sentiment. Exp. 52.8, actual 46.6 points.
• 10:00 Eurozone ZEW Economic Sentiment. Exp. 67.3, actual 61.5 points.
• 10:00 Eurozone Trade Balance. Exp. 13.9B.
• 12:30 US Building Permits. Exp. 0.97M.
• 12:30 US Core CPI. Exp. 0.1%.
• 12:30 US CPI. Exp. 0.1%.
• 12:30 US Housing Starts. Exp. 0.92M.
• 13:00 US TIC Long-Term Purchases. Exp. 23.4B.

*All times are GMT

For more events and lines, see the Euro to dollar forecast.

EUR/USD Sentiment

• Ukraine in spotlight: Events are moving fast in the Ukrainian crisis. Voters in Crimea voted overwhelmingly to join Russia, and Russian Prime Minister Putin has recognized Crimea as an independent state, paving the way for annexation. Putin will address the Russian parliament on Tuesday. The EU and US have responded with targeted sanctions, freezing assets of several high-ranking Russian officials. Additional sanctions are expected, possibly as early as this week.
• ESM confirmed by German Court: The European Stability Mechanism, which is the Eurozone’s bailout fund, was confirmed as legal by the German Federal Constitutional Court on Tuesday. Germany is the biggest contributor to the EUR 970 billion fund. In February, the court deferred a decision on the Outright Monetary Transactions, which is credited with saving weak members of the Eurozone, to the European Court of Justice.
• QE taper likely: Recent US numbers haven’t dazzled, but they should be strong enough for the Federal Reserve to go ahead with another taper of QE. This would be the third trim of the Fed’s asset-buying scheme, and would reduce QE to $55 billion per month. These tapers are dollar-positive and mark a vote of confidence in the US economy by the Federal Reserve.
• Draghi giveth, Draghi taketh away: ECB president gave the euro a big boost by not making any move in the rate decision. However, when the pair got close to 1.40, he already opened his mouth and released a thinly veiled hint about the exchange rate. This was the main reason for the euro crash.
• Chinese worries: The negative trade balance, a corporate default and weaker than expected figures create fears that China is slowing down faster than expected and that this hard landing will impact the entire world. Meanwhile, China is also thought to be more actively diversifying away from US dollars and hoarding euros, pushing up the value of the common currency.

 

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