EUR/USD – Robust Euro Flirts With 1.39

EUR/USD is on a tear, as the currency trades just under the 1.39 line on Friday. The euro has gained close to 200 points this week against the sagging US dollar. The greenback failed to make a dent in the euro rally despite an excellent reading from US Unemployment Claims. On Friday, German inflation indicators were weak but met expectations. Later in the day, ECB head Mario Draghi holds a press conference in Washington. Today’s US highlights are the Producer Price Index and UoM Consumer Sentiment.

In the US, Unemployment Claims rebounded sharply, as the key indicator dropped to 300 thousand last week. This beat the estimate or 314 thousand and marked the lowest reading since May 2007. With the Federal Reserve looking to trim its QE program and speculation rising about a possible interest rate increase, every employment release is under the market microscope.

The Federal Reserve minutes were eagerly awaited by the markets, but didn’t deliver much in the way of breaking news. Policymakers expressed concern about speculation over a possible rise in interest rates, but didn’t say when the central bank might change its current monetary policy. Under its QE program, the Fed is purchasing $55 billion in assets every month. There have been three tapers to QE so far, and the Fed chair Janet Yellen has said that the Fed plans to wind up QE late in the year. However, if there are any setbacks on the inflation or employment fronts, the Fed could be forced to delay further tapers. As the tapers are dollar-positive, any delay would be bearish for the greenback.

Tensions between the US and Russia continue to worsen over the Ukraine. On Monday, pro-Russian demonstrators took over a government building in an industrial city in the east of the country and declared their independence. Russia has warned the Ukraine not to react with force, while the US has accused Russia of continuing to foment unrest in the Ukraine ahead of elections in May. With the country split down the middle between pro-Western and pro-Russian camps, we could see the turmoil continue.

EUR/USD for Friday, April 11, 2014

EUR/USD April 11 at 8:35 GMT

EUR/USD 1.3892 H: 1.3905 L: 1.3886

EUR/USD Technical

• EUR/USD showed little movement in the Asian session, staying close to the 1.3790 line. The pair is unchanged in the European session.
• 1.3786 is providing strong support.
• On the upside, the pair is testing resistance at 1.3893. Will the pair break above this line? The next resistance line is at the key level of 1.40.
• Current range: 1.3786 to 1.3893

Further levels in both directions:

• Below: 1.3786, 1.3649, 1.3585, 1.3410 and 1.3335
• Above: 1.3893, 1.4000, 1.4149 and 1.4307

OANDA’s Open Positions Ratio

EUR/USD ratio is pointing to gains in short positions on Friday, continuing the direction seen a day earlier. This is not consistent with the pair’s current movement, as the euro has edged upwards. Short positions retain a strong majority, indicative of trader bias towards the dollar reversing its current direction and moving higher.

EUR/USD has edged higher on Friday and could push into 1.39 territory before the weekend. The pair is showing little movement in the European session.

EUR/USD Fundamentals

• 6:00 French German Final CPI. Estimate 0.3%. Actual 0.3%.
• 6:00 French German WPI. Estimate 0.1%. Actual 0.0%.
• 12:30 US PPI. Estimate 0.1%.
• 12:30 US Core PPI. Estimate 0.2%.
• 13:55 US Preliminary UoM Consumer Sentiment. Estimate 81.2 points.
• 13:55 US Preliminary UoM Inflation Expectations.
• 14:30 US Natural Gas Storage. Estimate 15B.
• 16:00 ECB President Mario Draghi Speaks.

*Key releases are highlighted in bold

*All release times are GMT

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