EUR/USD – Treading Softly to Start off Week

The euro has picked up where it left off last week, showing little movement as it trades quietly as we begin a new trading week. The euro jumped close to one cent on Thursday but has gone very quiet since then. In Monday’s European session, EUR/USD is testing the 1.33 line. Will the pair break out and cross above this barrier? It’s a very light schedule to start the week, with today’s only release the US Pending Home Sales. US releases pointed in all directions last week but the week ended on a high note, as US UoM Consumer Sentiment climbed higher and hit a multi-year high.

The euro has been looking good, and has gained around one cent since Thursday. The currency took advantage of weak employment and manufacturing data out of the US late last week and now finds itself at 5-week highs against the US dollar. The Eurozone posted some strong PMIs last week, and if we continue to see solid numbers out of Europe, the euro could rally further.

US consumer confidence is very high, at least according to UoM Consumer Sentiment, which was released on Friday. The indicator rose from 84.1 to 85.1 points, its highest level since July 2007. US consumers are clearly feeling good about the economy, but will this translate into stronger spending and more jobs? The markets will have to wait for data from these and other sectors to see if a happier consumer is indeed leading to greater economic activity.

Another vital sector for economic growth is the US housing industry. Last week the US posted two housing releases, which pointed in opposite directions.  Last week started off an a disappointing note as existing home sales fell to 5.08 million, way off the estimate of 5.27 million. However, New Home Sales showed strength, jumping from 476 thousand to 496 thousand, easily beating the estimate of 482 thousand. This was its best showing in five years. The markets will get another look at housing data on Monday, with the release of Pending Home Sales. The key indicator looked super last month, posting a gain of 6.7%. However, the markets are braced for a much weaker reading in July, with an estimate of a 1.1% decline.

EUR/USD for Monday, July 29, 2013

EUR/USD 1.3292 H: 1.3294 L: 1.3261

EUR/USD Technical

EUR/USD has broken through resistance at 1.3275, and this line has reverted to  a weak support level. There is stronger support at 1.3162. On the upside, the pair faces strong resistance at the round number of 1.34. This is followed by a resistance line at 1.3476.

• Current range: 1.3275 to 1.3400

Further levels in both directions:

• Below: 1.3275, 1.3162, 1.3100, 1.3050, 1.3000 and 1.2943
• Above: 1.34, 1.3476, 1.3585 and 1.3649

OANDA’s Open Positions Ratio

EUR/USD ratio is starting of  the week with no change from Friday.  This is reflected in the pair, which is trading quietly on Monday. A large majority of the ratio’s positions are short, indicating that trader sentiment expects the dollar to improve against the euro.

The week is off to an uneventful start, as EUR/USD trades close to the 1.33 line. Monday’s only release is US Pending Home Sales, but it is a market-mover, so we could see some action from the sleepy pair if this release is not in line with market expectations.

EUR/USD Fundamentals

• 14:00 US Pending Home Sales. Estimate -1.1%.

*Key releases are highlighted in bold

*All release times are GMT

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