EUR/USD is trading in the high range of 1.2750 to 1.28 after an extreme market storm. The weak US retail sales sparked a dollar and stock sell off, sending euro/dollar 200 pips higher before sliding 100 pips and stabilizing only after a long time. The blessed volatility provides opportunities and also risks. Will we see another storm today? Final CPI from Europe and quite a few US figures are set to rock the pair.
Here’s a quick update on technicals, fundamentals and sentiment moving the pair.
- Asian session: The pair began dropping from the highs and eventually slid below 1.28.
- Current range:Â 1.26 to 1.2660
Further levels in both directions:
- Below: Â 1.2750, 1.27, 1.2660, 1.26, 1.2570 and 1.25.
- Above:Â 1.28, 1.2850, 1.2920 and 1.30 and 1.31, which is targeted by one bank.
- 1.2750 is now a pivotal line within the range.
- 1.2850 is the top line and 1.2660 returns to support.
EUR/USD Fundamentals
- 8:00 Italian Trade Balance. Exp. 3.24 billion.
- 9:00Â Euro-zone final CPI, exp. +0.3%, core exp. +0.7%.Â
- 9:00 Euro-zone trade balance. Exp. 13.5 billion.
- 12:00 US FOMC member Charles Plosser speaks. He is hawkish.
- 12:30 US jobless claims. Exp. 286K.
- 13:15 US industrial output. Exp. +0.4%.
- 13:15 USÂ Capacity Utilization Rate. Exp. 79%.
- 14:00 USÂ Philly Fed Manufacturing Index. Exp. 19.9 points.
- 14:00 USÂ NAHB Housing Market Index. Exp. 59 points.
- 14:00 US FOMC Narayana Kocherlakota. He is dovish.
- 20:00 USÂ TIC Long-Term Purchases. Exp. +23.3 billion.
* All times are GMT.
For more events and lines, see the EUR/USD.
EUR/USD Sentiment
- Market crash with USD sell off: US retail sales disappointed and so did PPI and the Empire State Manufacturing Index. This resulted in a huge crash in stock markets, a spike in bonds and a sell off of the greenback. Market moves were certainly impressive, with EUR/USD reaching 1.2880 from 1.2660 before the release. We are now seeing some kind of a stabilization, but this might be just the calm before the next storm. A lot depends on the updated data, and it might not necessarily be that bad.
- Euro rate hikes not before 2017: In his speech in Washington, Draghi maintained a dovish tone, vowing to do what is necessary to battle low inflation and repeated his usual stance. He didn’t rock the markets yesterday and now the focus is on the updated inflation numbers for September. The initial inflation numbers were rock bottom.
- German forecasts downgraded:Â German business confidence turned negative for the first time since 2012. The ZEWÂ figure was later followed by another disappointment: the German government cut forecasts quite sharply. Both growth and inflation look weak now.
- Greek worries: Greece and the troika are on a collision course once again. While the country has stayed away from the news for quite some time, it could creep back. Adding political instability and a primary surplus to the mix already sent Greek bond yields higher, above 7%.
In our latest podcast, we talk about the US labor market, run down the FOMC minutes, reflect on falling oil and discuss next week’s events:
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