EUR/USD September 16 – Rangebound As US Manufacturing Numbers

EUR/USD is showing little movement as we begin the new trading week. The pair is trading in the mid-1.33 range in Monday’s North American session. On Friday, US releases ended the week on a sour note, as UoM Consumer Sentiment posted a five-month low. Taking a look at Monday’s events, ECB head Mario Darghi spoke at a conference in Berlin. Euro CPI and Core CPI both matched the market forecasts. Over in the US, Empire State Manufacturing Index dropped sharply. As well, Lawrence Summers announced that he was withdrawing his nomination for head of the US Federal Reserve.

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

EUR/USD Technical

• In the Asian session, EUR/USD was  uneventful, touching, a high of 1.3382 late in the session and consolidating at 1.3368. The pair touched a high of 1.3385 in the European session but has since edged lower.

Current range: 1.3240 to 1.3300.

Further levels in both directions:

• Below: 1.3240, 1.3175, 1.31, 1.3050 and 1.30.
• Above: 1.3325, 1.3450, 1.3520, 1.3590 and 1.37.
• 1.3300 is providing weak resistance.
• 1.3240 is a weak support level. 1.3175 follows.

EUR/USD Fundamentals

• 8:00 ECB President Darghi Spoke. Draghi addressed the SME conference of Bundesverband der Deutschen Industrie eV in Berlin.
• 8:00 Italian Trade Balance. Exp. 4.13B. Actual 5.95B.
• 9:00 Eurozone CPI. Exp. 1.3%. Actual 1.3%.
• 9:00 Eurozone Core CPI. Exp. 1.1%. Actual 1.1%.
• 12:30 US Empire State Manufacturing Index. Exp. 9.2 points, Actual 6.3 points.
• 13:15 US Capacity Utilization Rate. Exp. 77.8%, Actual 77.8%
• 13:15 US Industrial Production. Exp. 0.5%., Actual 0.4%.

* All times are GMT.

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

EUR/USD Sentiment

• US data continues to disappoint: US releases have run into trouble, and UoM Consumer Sentiment looked awful on Friday. The key indicator dropped from 80.0 points in July to 76.8 in August, its lowest level since March. This weak figure comes on the heels of weak US retail sales releases on Thursday. The yen has taken advantage of these poor US numbers and has gained about 150 points since the middle of last week. The new week didn’t start out much better, as Empire State Manufacturing Index, an important release, posted another sharp drop in August. The indicator fell from 8.2 points to 6.3 points. This was way off the estimate of 9.2 points. The markets are hoping that the US numbers will get back on track on Tuesday ,with the release of Core CPI, a key event.
• Summers withdraws from Fed race: US Federal Reserve Bernard Bernanke steps down at the end of January, and the race to replace Bernanke has taken a dramatic twist. Former Treasury Secretary Lawrence Summers was considered the leading contender for the prestigious position. Surprisingly, Summers has withdrawn his nomination, leaving Vice Chairman Janet Yellen as the favored candidate. Yellen is considered dovish and may be hesitant when it comes to QE tapering. The dollar responded to the news of Summers’ withdrawal by losing ground against the major currencies.
• Unemployment Claims Drop: US Unemployment Claims dropped on Thursday, but a Department of Labor spokesman said the decrease was due to computer upgrades in two states, which meant that not all claims were processed. Even so, unemployment claims are looking good. The four-week average, which is a less volatile gauge of unemployment claims, dropped to 321,000, its lowest level since 2007. If employment data continues to improve, we could see the Fed press the tapering trigger sooner rather than later.
• Latvia welcomes Draghi: ECB head Mario Draghi was in Latvia on Thursday, where he delivered remarks at the Bank of Latvia’s Economic Conference. The timing of the trip was not coincidental, as the Baltic country is set to join the Eurozone on January 1, 2014. The small country of just 2.4 million will be the 18th member of the zone. Latvia’s economy has been doing well, but public support for adopting the euro has been weak, with fears of rising prices and Eurozone contagion.

Further reading:

• EURUSD Could Be Forming A Major Turning Point For The Year-Elliott Wave Analysis
• Forex Analysis: EUR/JPY Continues Consolidation within Clear Triangle Pattern

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