EUR/USD – Little Change as Markets Eye US Housing Release

EUR/USD has not shown much movement this week, and this trend is continuing in Wednesday trading. The pair is trading in the mid-1.33 range in the European session. In economic news, the US finally broke out with some strong releases as consumer climate and manufacturing releases looked very sharp. On Wednesday, German Consumer Climate disappointed as it fell short of the estimate. On a brighter note, Eurozone M3 Money Supply surpassed the forecast. The market-mover of the day is US Pending Home Sales.

After some weak key releases, the US rebounded nicely on Tuesday, with excellent consumer confidence and manufacturing numbers. CB Consumer Confidence rose to 81.5 points in August, its highest level since January 2008. The estimate stood at 79.6. After some weak manufacturing data earlier in the week, Richmond Manufacturing Index sparkled, soaring from -1 to +14 points. This crushed the estimate of -7 points and was the indicator’s best showing since April 2012. If US data continues to look good, we could see the dollar post gains against the euro, which has failed to take advantage of the recent weak numbers out of the US.

Back in the Eurozone, German numbers have been a mixed bag this week. German Ifo Business Climate started the week on a positive note, posting its fourth consecutive gain and climbing to its highest level in over a year. However, GfK German Consumer Climate could not keep up the pace, as it dipped from 7.0 to 6.9 points, missing the estimate of 7.1 points. Last month’s reading of 7.0 was a multi-year high, so the slight decline is unlikely to be of great concern to the markets. German consumers continue to spend, but are worried about inflation. National elections are just a few weeks away, and the German economy promises to be the central issue of the campaign as Chancellor Angela Merkel seeks a third straight term in office.

Greece is asking for more aid, but doesn’t want any strings attached. The country has already received two bailouts from the troika, amounting to some 240 billion euros. Despite this massive infusion of funds, the country’s economy is still in difficult straits, and there is now talk of a third bailout. On Sunday, Greek finance minister Yannis Stournaras said that Greece was looking for another 10 billion euros in aid, but would not adopt any austerity measures in return. Germany is unlikely to be in a giving mood, with just weeks to go before national elections in Germany. Additional aid for Greece could damage Chancellor Angela Merkel’s credibility, as she recently stated that she didn’t see a need for more aid to Greece.

EUR/USD for Wednesday, August 28, 2013

EUR/USD 1.3366 H: 1.3398 L: 1.3362

EUR/USD Technical

• EUR/USD has edged lower in Wednesday trading. The pair touched a high of 1.3398 in the Asian session and consolidated at 1.3377. In European trading, the pair has edged lower.
• EUR/USD continues to face resistance at 1.3410. The next line of resistance is at 1.3476.
• On the downside, the pair continues to receive support at the round number of 1.3300. There is stronger support at 1.3162. This line has remained firm since mid-July.
• Current range: 1.3300 to 1.3410

Further levels in both directions:

• Below: 1.3300, 1.3162, 1.3100, 1.3050 and 1.3000
• Above: 1.3410, 1.3476, 1.3585 and 1.3649

OANDA’s Open Positions Ratio

EUR/USD ratio is showing movement for the first time this week, in the direction of short positions. This is reflected in the movement of the pair, as the euro has sustained modest losses in Wednesday trading. The ratio continues to have a large majority of short positions, indicating strong trader bias towards the US dollar making inroads at the expense of the euro.

EUR/USD has had a quiet week, as the pair trades in the mid-1.33 range. Will the pair break out? We could see some increase in activity as the US releases key housing data later in the day.

EUR/USD Fundamentals

• 6:00 GfK German Consumer Climate. Estimate 7.1. Actual 6.9 points.
• 6:00 German Import Prices. Estimate 0.3%. Actual 0.3%.
• 8:00 Eurozone M3 Money Supply. Estimate. 2.0%. Actual 2.2%.
• 8:00 Italian Retail Sales. Estimate 0.1%. Actual -0.2%.
• 6:00 Eurozone Private Loans. Estimate -1.5%. Actual -1.9%.
• 14:00 US Pending Home Sales. Estimate 0.2%.
• 14:30 US Crude Oil Inventories. Estimate 0.5M.

*Key releases are highlighted in bold

*All release times are GMT

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