EUR/USD – Euro Firm As Markets Eye US Consumer Confidence

EUR/USD is steady on Tuesday, as the pair trades in the mid-1.37 range in the European session. In Eurozone releases, German GDP met the forecast, but Italian Retail Sales posted a decline and missed the estimate.  We’ll get a look at the EU Economic Forecasts later in the day. In the US, today’s highlight is CB Consumer Confidence.

German data looked sharp on Monday, as German Ifo Business Climate improved to 111.3 points last month, beating the estimate of 110.7. The key indicator has been on the upswing since early 2013, and January’s reading was the best since May 2011. The strong German numbers were a welcome change from last week, when German ZEW Economic Sentiment slipped badly and PMI releases were mixed. On the inflation front, Eurozone CPI and core CPI both came in at 0.8%, within expectations but significantly lower than the ECB inflation target of 2.0%. If inflation continue remain steady, we could see the ECB stand pat and refrain from any monetary moves, as was the case earlier this month.

Is the US housing sector experiencing a downturn? Recent US numbers have not looked sharp, and the weak numbers are being felt in the housing industry. Building Permits slid to a five-month low in January, dropping to 0.94 million. The estimate stood at 0.98 million. Existing Home Sales looked awful, dropping to 4.62 million in January, compared to 4.87 million a month earlier. This was well short of the estimate of 4.73 million, and the lowest reading from the key indicator since July 2012. The markets will be hoping for better news from New Home Sales, which will be released on Wednesday.

Last week’s Federal Reserve minutes indicated that interest rates are unlikely to rise, even if unemployment drops to 6.5%. Previously, the Fed had said it would consider raising rates at the 6.5% threshold, but with unemployment falling faster than expected, Fed policymakers agreed that it would “soon be appropriate” to revise the Fed’s forward guidance regarding interest rate levels. The minutes also indicated that the Fed will likely continue trimming QE, barring any downturns in the economy.

EUR/USD for Tuesday, February 25, 2014

EUR/USD February 25 at 11:20 GMT

EUR/USD 1.3749 H: 1.3763 L: 1.3729

EUR/USD Technical

• EUR/USD has posted slight gains on Tuesday. The pair touched a high of 1.3763 late in the Asian session.
• 1.3649 is providing strong support. The next support line is at 1.3585.
• 1.3786 is the next line of resistance. This line is not strong and could face pressure if the euro moves to higher ground. This is followed by 1.3893, which is protecting the 1.39 level.
• Current range: 1.3649 to 1.3786

Further levels in both directions:

• Below: 1.3649, 1.3585, 1.3410, 1.3347 and 1.3255
• Above: 1.3786, 1.3893, 1.4000 and 1.4149.

OANDA’s Open Positions Ratio

EUR/USD ratio is unchanged on Tuesday, continuing the pattern we’ve seen since last week. This is consistent with the pair’s current movement, as the pair continues to show little movement. Short positions have a strong majority, indicative of trader bias towards the dollar moving higher against the euro.

The euro continues to look strong, trading in the mid-1.37 range. EUR/USD is steady in the European session.

EUR/USD Fundamentals

• 7:00 German Final GDP. Exp. 0.4%. Actual 0.4%.
• 9:00 Italian Retail Sales. Exp. 0.4%. Actual -0.3%.
• 12:45 EU Economic Forecasts.
• 14:00 US S&P/CS Composite-20 HPI. Exp. 13.3%.
• 14:00 US HPI. Exp. 0.4%.
• 15:00 US CB Consumer Confidence. Exp. 80.2 points.
• 15:00 US Richmond Manufacturing Index. Exp. 13 points.
• 15:10 US FOMC Member Daniel Tarullo Speaks.

*Key releases are highlighted in bold

*All release times are GMT

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