EUR/USD May 23 – Volatility Continues after Beranke Remarks

This week started slowly, but that changed dramatically on Wednesday, as the euro went on a wild ride following remarks by Federal Reserve Chair Bernard Bernanke before a Congressional Committee. The euro tested the 1.2998, but then fell hard, closing the day at 1.2842. Almost forgotten in the excitement was US Existing Home Sales, which fell below expectations. There are a host of US and Eurozone releases on Thursday. European PMIs were mixed, but French and German Manufacturing PMIs managed to beat their estimates. There are two US key releases later in the day – Unemployment Claims and New Home Sales. 

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

EUR/USD Technical

• Asian session: Euro/dollar edged lower, touching a low of 1.2821, and consolidating at 1.2832. The pair has pushed higher in the European session, and was trading at 1.2882.

Current range: 1.2880 – 1.2960.

Further levels in both directions: 

<img alt=”EUR USD Daily Forecast May22″ src=”https://forexcrunch-wpengine.netdna-ssl.com/wp-content/uploads/2013/05/EUR-USD-Daily-Forecast-May22-350×196.png” width=”350″ height=”196″ /> 

<img alt=”EUR USD Daily Forecast May21″ src=”https://forexcrunch-wpengine.netdna-ssl.com/wp-content/uploads/2013/05/EUR-USD-Daily-Forecast-May21-350×196.png” width=”350″ height=”196″ />
<img alt=”EUR USD Daily Forecast May20″ src=”https://forexcrunch-wpengine.netdna-ssl.com/wp-content/uploads/2013/05/EUR-USD-Daily-Forecast-May20-350×196.png” width=”350″ height=”196″ />
<img alt=”EUR USD Daily Forecast May17″ src=”https://forexcrunch-wpengine.netdna-ssl.com/wp-content/uploads/2013/05/EUR-USD-Daily-Forecast-May17-350×196.png” width=”350″ height=”196″ />
<img alt=”EUR USD Daily Forecast May16″ src=”https://forexcrunch-wpengine.netdna-ssl.com/wp-content/uploads/2013/05/EUR-USD-Daily-Forecast-May16-350×196.png” width=”350″ height=”196″ />
<img alt=”EURUSD Technical outlook fundamental analysis and sentiment for May 15 2013 currency trading” src=”https://forexcrunch-wpengine.netdna-ssl.com/wp-content/uploads/2013/05/EURUSD-Technical-outlook-fundamental-analysis-and-sentiment-for-May-15-2013-currency-trading-350×186.png” width=”350″ height=”186″ />

• Below: 1.2890, 1.2840, 1.2800, 1.2750, 1.27, 1.2624 and 1.2587.
• Above: 1.2960, 1.30, 1.3030, 1.31, 1.3160 and 1.32.
• 1.2880 is under pressure on the downside. 1.2805 is stronger.
• 1.2960 is the next line of resistance.

Euro pushes towards 1.29 as volatility continues – click on the graph to enlarge.

EUR/USD Fundamentals

• 7:00 French Flash Manufacturing PMI. Exp. 44.8 points. Actual 45.5 points.
• 7:00 French Flash Services PMI. Exp. 44.7 points. Actual 44.3 points.
• 7:30 German Flash Manufacturing PMI. Exp. 48.6 points. Actual 49.0 points.
• 7:30 German Flash Services PMI. Exp. 50.2 points. Actual 49.8 points.
• 8:00 Eurozone Flash Manufacturing PMI. Exp. 47.1 points. Actual 47.8 points.
• 8:00 Eurozone Flash Services PMI. Exp. 47.4 points. Actual 47.5 points.
• 8:00 Italian Retail Sales. Exp. 0.3%. Actual -0.3%.
• 10:05 US FOMC Member James Bullard Speaks.
• 12:30 US Unemployment Claims. Exp. 347K.
• 13:00 US Flash Manufacturing PMI. Exp. 51.6 points.
• 13:00 US HPI. Exp. 0.9%.
• 14:00 Eurozone Consumer Confidence. Exp. -22 points.
• 14:00 US New Home Sales. Exp. 429K.
• 14:30 US Natural Gas Storage. Exp. 90B.
• 19:30 ECB President Mario Draghi Speaks.

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

EUR/USD Sentiment

• Bernanke sends euro on wild ride: US Federal Reserve Chair Bernard Bernanke was in the spotlight on Wednesday, as he testified before the Joint Economic Committee of Congress. Bernanke first stated that tightening monetary policy could hurt the economic recovery. The euro reacted by rising sharply, testing the 1.30 level, but this proved to be a short-lived move. Bernanke later said that if US economic data improved, a decision to scale back QE could be taken in the “next few meetings”. This brought the euro back down in a hurry, and the pair closed the day at 1.2842.
• Fed Minutes show split over QE: Overshadowed by Bernard Bernanke’s testimony in Congress was the release of the minutes of the most recent FOMC policy meeting. Bernanke later said that if US economic data improved, a decision to scale back QE could be taken in the “next few meetings”. This brought the euro back down in a hurry. It should be noted that the minutes relate to a meeting which took place at the beginning of May, in contrast to the fresh testimony of Bernanke on Wednesday.
• Where is US economy headed?: US releases have not impressed lately, and the disappointing trend continued last week. Inflation and manufacturing numbers fell below expectations, and housing data did not meet the estimate. Unemployment Claims had looked impressive in recent readings, but was well above expectations. There was better news from Building Permits, and the UoM Consumer Sentiment shot up to wrap up the week. This week’s first major release, US Existing Home Sales, missed the estimate. The markets will be hoping for a turnaround as the US releases more key events later this week.
• What’s wrong with Germany?: Germany, the largest economy in the Eurozone and the “locomotive of Europe”, continues to sputter. Last week, GDP and inflation numbers were not impressive, and Thursday’s PMIs were mixed, as Manufacturing PMI beat the estimate, while Services PMI did not meet expectations. Both releases were under the 50-point level, indicating contraction. Germany will have to show better numbers if the Eurozone is to get back on its feet, as the weak numbers out of Germany and the Eurozone continue to weigh on the shaky euro.

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