EUR/USD – Stable As Greece in Spotlight

EUR/USD is calm on Tuesday, as the pair trades at the 1.13 line in Tuesday’s European session. On the release front, Eurozone CPI posted a decline of -0.6%, matching expectations. The Eurogroup will meet yet again in Brussels to discuss an extension of the bailout agreement. As well, ECB head Mario Draghi will speak at an event in Frankfurt. In the US, Federal Reserve head Janet Yellen will testify before the Senate Banking Committee. As well, the US releases the CB Consumer Confidence report.

The Greek bailout saga continues, as Greece and its creditors try to find some common ground on a bailout extension. Greece was granted a four-month extension on Friday, provided that the country could provide a list of “reform commitments” showing that Greece would continue to reform its economy. Greece’s creditors will review the proposals on Tuesday before giving their approval to the extension. Even if this occurs, the extension is a stop-gap measure and the bailout crisis is far from over.

The markets will be keeping a close eye on Federal Reserve chair Janet Yellen, who testifies before the Senate Banking Committee later on Tuesday. Last week’s Fed minutes were dovish in stance, as policymakers expressed concern about a mid-year rate hike hurting the US recovery. What will be Yellen’s take on a rate hike? If Yellen does provide any hints in this regard, we could see some movement from EUR/USD.

US releases started the week on a sour note, as Existing Home Sales slipped to 4.82 million in January, well off the estimate of 5.03 million. This marked a 9-month low for the key indicator. We’ll get a look at New Home Sales on Wednesday. Late last week, US key numbers were mixed. Unemployment Claims rebounded strongly with a sharp drop of 283 thousand, compared to 304 thousand a week earlier. This easily beat the estimate of 293 thousand. The news was not as good from the Philly Fed Manufacturing Index, which slipped to 5.2 points, down from 5.3 points and a third straight drop. The markets had expected a reading of 8.8 points.

EUR/USD for Tuesday, February 24, 2015

EUR/USD February 23 at 11:00 GMT

EUR/USD 1.1305 H: 1.1341 L: 1.1298

EUR/USD Technical

• EUR/USD was flat in the Asian session. The pair has edged lower in the European session.
• 1.1340 is a weak resistance line. 1.1426 is stronger.
• 1.1231 is an immediate support level.
• Current range: 1.1231 to 1.1340

Further levels in both directions:

• Below: 1.1231, 1.1154, 1.1066 and 1.0909
• Above: 1.1340, 1.1426, 1.1525, 1.1634 and 1.1754

OANDA’s Open Positions Ratio

EUR/USD ratio is pointing to gains in short positions on Tuesday, reversing the direction seen a day earlier. This is consistent with the movement of the pair, as the euro has posted small losses. The ratio is pointing to short positions, indicative of trader bias towards EUR/USD losing ground.

EUR/USD Fundamentals

• 7:00 German Final GDP. Estimate 0.7%. Actual 0.7%.
• 10:00 Eurozone Final CPI. Estimate -0.6%. Actual -0.6%.
• 10:00 Eurozone Final Core CPI. Estimate 0.6%. Actual 0.6%
• All Day – Eurogroup Meetings.
• 14:00 ECB President Mario Draghi Speaks.
• 14:00 Belgian NBB Business Climate. Estimate -8.4 points.
• 14:00 US S&P/Composite-20 HPI. Estimate 4.5%.
• 14:45 US Flash Services PMI. Estimate 54.5 points.
• 15:00 US CB Consumer Confidence. Estimate 99.6 points.
• 15:00 US Federal Reserve Janet Yellen Testifies.
• 15:00 US Richmond Manufacturing Index. Estimate 7 points.

*Key releases are highlighted in bold

*All release times are GMT

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