EUR/USD: Euro trades flat seeking the equilibrium between politics and the economy
The euro is trading little changed around $1.1730 against the US Dollar on data weak Tuesday. After the roller-coaster rise on Monday caused by the collapse of coalition talks in Germany Angela Merkel prefers new elections while German President Steinmeier looks for renewed discussions.
Even without the government German economy is doing well with Bundesbank expecting the brisk economic growth rate to continue well into 2018.
1. Technical Overview
The pair’s upside bias should remain unchanged as long as 1.1682/1.1721 continues to hold, suggested Karen Jones, Head of FICC Technical Analysis at Commerzbank.
Jim Langlands at FX Charts noted: “The short-term momentum indicators still look a little heavy and we might see another test of the 1.1721 low, below which could allow a decline towards 1.1700, below which 1.1670/80 would attract. On the other hand, the daily MACDs still suggest that further gains are possible in the days ahead, and back above the session high of 1.1807 would open up 1.1820/30, which would find good sellers ahead of 1.1855/60 and again at 1.1880/85, beyond which would allow a run towards 1.1900+.”
EUR/USD PRICE SENTIMENT
EUR/USD BULLISH PERCENTAGE INDEX
The major pair was unable to break back above some important resistance at 1.1880 and is paying the price because of it into Tuesday. This latest topside failure keeps alive that head & shoulders top that triggered several days back.
EUR/USD Pivot points
EUR/USD trading positions
2. Fundamental Overview
EUR/USD closed below the 100-day MA yesterday but failed to cut through the support offered by the trendline sloping downwards from the Sep. 8 high and Sep. 20 high.
So is the drop in the EUR justified? Mario Blascak, European Chief Analyst at FXStreet, believes there is no problem with any scenario - new elections or minority government. Blascak says, "countries like Belgium, Holland and Czech Republic have a long tradition of forming a government for ages and nothing happened to countries’ economies. In terms of currency reaction, the move downwards has been a bit unjustified and it is likely that the EUR/USD will correct towards $1.1800 soon. However, risk reversals indicate a falling demand for EUR calls.
Later today, the focus will remain on the German political development and USD dynamics amid a lack of fundamental news out of Euroland. Meanwhile, the US docket also remains light, with the only existing home sales lined up for release.
EURUSD FUNDAMENTALS TODAY
3. Latest News & Analysis
4. EUR/USD Big Picture
Themes affecting the EUR/USD
Influential Institutions & People for the EUR/USD
The Euro US Dollar can be seriously affected by news or the decisions taken by two main central banks:
The European Central Bank (ECB) is the central bank empowered to manage monetary policy for the Eurozone and maintain price stability, so that the euro’s purchasing power is not eroded by inflation. The ECB aims to ensure that the year-on-year increase in consumer prices is less than, but close to 2% over the medium term. Another of its tasks is the one of controlling the money supply. The European Central Bank’s work is organized via the following decision-making bodies: the Executive Board, the Governing Council and the General Council. Mario Draghi, member of the Executive Board, is also the President of this organism.
On the other
Mario Draghi is member of ECB's Executive Board and also the President of this organism. His declarations are an important source of volatility, especially for the Euro and the currencies traded against it. Born in 1947 in Rome, Italy, he graduated of the Massachusetts Institute of Technology and became President of the European Central Bank in 2011. Draghi gives press conferences in the back of how the ECB observes the current European economy. His comments may determine positive or negative trends for the Euro in the short-term. Usually, a hawkish outlook is seen as positive/bullish for the EUR, while a dovish one is seen as negative/bearish.
Janet L. Yellen (born August 13, 1946) took office as Chair of the Board of Governors of the Federal Reserve System (Fed) on February 3, 2014, for a four-year term ending February 3, 2018. She had already previously served as a Vice Chair from 2010 to 2014. This American economist also serves as Chairman of the Federal Open Market Committee (FOMC), the System's principal monetary policymaking body. Her declarations are also an important source of volatility, especially for the US Dollar and the currencies traded against it.
ECB NEWS & ANALYSIS
FED NEWS & ANALYSIS
The EUR/USD (or Euro Dollar) currency pair belongs to the group of 'Majors', a way to mention the most important pairs in the world. This group also includes the following currency pairs: GBP/USD, USD/JPY, AUD/USD, USD/CHF, NZD/USD and USD/CAD. The popularity is due to the fact that it gathers two main economies: the European and American (from United States of America) ones. This is a widely traded currency pair where the Euro is the base currency and the US Dollar is the counter currency. Since the EUR/USD pair consists of more than half of all the trading volume worldwide in the Forex Market, it is almost impossible for a gap to appear, let alone a consequent breakaway gap in the opposite direction.
Normally, it is very quiet during the Asian session because economic data that affects the fundamentals of those currencies is released in either the European or U.S. session. Once traders in Europe get to their desks a flurry of activity hits the tape as they start filling customer orders and jockey for positions. At noon activity slows down as traders step out for lunch and then picks back up again as the U.S. comes online. If there is important U.S. data we can expect quiet markets just ahead of the number. U.S. economic news have the ability to either reinforce an existing trend or reverse it depending on by how much it missed or beat expectations with the EUR/USD news. By 5:00 GMT liquidity leaves the market once again as European traders close out positions and head home.
EURUSD 2017 YEARLY FORECAST
The GBP/USD (or Pound Dollar) currency pair belongs to the group of 'Majors', a way to mention the most important pairs worldwide. This group also includes the following currency pairs: EUR/USD, USD/JPY, AUD/USD, USD/CHF, NZD/USD and USD/CAD. The pair is also called 'The Cable', reffering to the first Transatlantic cable that was crossing the Atlantic Ocean in order to connect Great Britain with the United States of America. This term was originated in the mid-19th century and it makes GBP/USD one of the oldest currency pairs in the world.
The popularity of the Pound Dollar is due to the fact that represents two strong economies: British and American (from United States of America). The Cable is a widely observed and traded currency pair where the Pound is the base currency and the US Dollar is the counter currency. After the result of the Brexit referendum, where the majority of the British voted to abandon the European Union, GBP/USD has been suffering some turbulence in the Forex market as a consequence of the associated risks of leaving the single market.
The USD/JPY (or US Dollar Japanese Yen) currency pair is one of the 'Majors', the most important pairs in the world. Japanese Yen has a low interest rate, normally used in carry trades, that's why is one of the most trades currencies worldwide. In the USD/JPY the US Dollar is the base currency and the Japanese Yen is the counter currency. The pair represents American (from United States of America) and Japanese economies.
Trading the USD/JPY currency pair is also known as trading the "ninja" or the "gopher", although this last name is more frequently used when reffered to the GBP/JPY currency pair. The US Dollar Japanese Yen usually has a positive correlation with the following two pairs: USD/CHF and USD/CAD. The nature of this correlation is dued to the fact that both currency pairs also use the US Dollar as the base currency, such as USD/JPY. The value of the pair tends to be affected when the two main central banks of each country, the Bank of Japan (BoJ) and the Federal Reserve Bank (Fed), face serious interest rate differential.