EUR/USD – Euro Slide Continues After Strong US Housing Data

EUR/USD had a quiet start to the week, but the pair has coughed up about 100 points since Tuesday. In Thursday’s European session, the euro is trading in the mid-1.36 range. The dollar received a boost from excellent New Home Sales on Wednesday. In Thursday news, German Unemployment Claims posted its third consecutive decline and beat the estimate. Over in the US, we’ll get a look at Core Durable Goods Orders and the all-important Unemployment Claims. As well, Fed Reserve chair Janet Yellen testifies before the Senate.

A nasty streak of weak US releases ended on Wednesday as New Home Sales jumped by 468 thousand, crushing the estimate of 406 thousand. It was the key indicator’s best showing since last June, and helped allay concerns about the health of the housing sector, following weak housing numbers last week. The markets will be looking for more good news on Thursday, as the US releases Core Durable Goods Orders and the all-important Unemployment Claims.

It’s been a solid week for German releases. German GfK Consumer Climate continues to rise, as the key indicator moved upwards for the fourth straight month. The indicator hit 8.5 points in January, its highest level since January 2007. The markets had expected another strong showing, with an estimate of 8.3 points. The excellent reading comes on the heels of an excellent reading from German Ifo Business Climate. German unemployment levels continue to drop, as Unemployment Change declined by 14 thousand, its third straight decline. This beat the estimate of -10 thousand. With the ECB under pressure to take action and boost the sputtering Eurozone economy, good news from Germany, the largest economy in the bloc, is especially welcome.

The markets are keeping a close eye on Capitol Hill, as Federal Reserve Chair Janet Yellen testifies before the Senate later on Thursday. Yellen is expected to reiterate that Fed will likely continue trimming QE, barring any downturns in the economy. 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, Federal Reserve policymakers agreed that it would “soon be appropriate” to revise the Fed’s forward guidance regarding interest rate levels, and such a move could shake up the currency markets.

EUR/USD for Thursday, February 27, 2014

EUR/USD February 27 at 12:25 GMT

EUR/USD 1.3657 H: 1.3696 L: 1.3643

EUR/USD Technical

• EUR/USD continues to lose ground on Thursday. The pair dropped to a low of 1.3643 earlier in the European session.
• On the downside, 1.3649 is under strong pressure. The next support line is at 1.3585.
• 1.3786 is the next line of resistance. This line has strengthened as the euro trades at lower levels. 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 pointing to gains in long positions on Thursday. This is not consistent with the pair’s current movement, as the euro has posted losses against the dollar. Short positions retain a strong majority, indicative of trader bias towards the dollar continuing to move to higher ground.

The euro continues to lose ground on Thursday. EUR/USD is steady in the European session.

EUR/USD Fundamentals

• 00:30 US FOMC Member Sandra Pianalto Speaks.
• 7:00 German Import Prices. Estimate -0.1%. Actual -0.1%.
• All Day – German Preliminary CPI. Estimate 0.6%.
• 8:55 German Unemployment Change. Estimate -10K. Actual -14K.
• 9:00 Eurozone M3 Money Supply. Estimate 1.1%.Actual 1.2%.
• 9:00 Eurozone Private Loans. Estimate -2.2%. Actual -2.2%.
• 9:00 Eurozone Spanish HPI. Estimate -1.8%.
• Tentative – Italian 10-year Bond Auction.
•  13:30 US Core Durable Goods Orders. Estimate -0.1%.
•  13:30 US Unemployment Claims. Estimate 333K.
•  13:30 US Durable Goods Orders. Estimate -0.7%.
• 15:00 Federal Reserve Chair Janet Yellen testifies before the Senate Banking Committee.
• 15:30 US Natural Gas Storage. Estimate -110B.

*Key releases are highlighted in bold

*All release times are GMT

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