After enjoying a solid 24 hours which saw the Euro leave its recent trading range and push up through the 1.31 level, the Euro has been to content to maintain the level above 1.31 and settle there. This was despite its quick movement below 1.31 and back again within the last eight hours or so. This recent movement has moved it within reach of the longer term resistance level at 1.32. Prior to its recent movement higher, the Euro had been content to consolidate in a range between 1.30 and 1.31 after its amazing surge higher touching 1.32 briefly and a three week high last week.
It has been some time since the Euro has experienced a 24 hour period with as much range as the period last week when it surged higher. Prior to that jump, the Euro had been in a very solid medium term down trend after succumbing to the resistance at 1.29 and moving down below the key long term level of 1.28. This resulted in it trading at a multi-year low near 1.2750. After reaching a four month high above 1.34 a few weeks ago, the EUR/USD was in the midst of a very solid medium term down trend which has seen it fall sharply. Its decline was slowed a little over the last couple of weeks as it traded between 1.30 and 1.31 however a couple of weeks ago it fell strongly again moving down to below 1.28.
It was only a couple of weeks ago that the 1.30 level was standing up and proving itself to be a brick wall of support, and even though it failed a couple of weeks ago leading to the new lows, it has since been called upon again to offer support. Throughout May and most of June the Euro surged higher to a four month high above 1.34. Before that in the first half of May, the Euro fell considerably from near 1.32 down to six week lows near 1.28. Back at the beginning of April the Euro received solid support around 1.28 and this level was called upon to provide additional support. Throughout this year the Euro has moved very strongly in both directions. Throughout February and March the Euro fell sharply from around 1.37 down to its lowest level since the middle of November around 1.2750. Sentiment has completely changed with the Euro over the last few weeks and the last couple of months has seen a rollercoaster ride for the Euro as it continued to move strongly towards 1.34 before falling very sharply to below 1.29 and setting a 6 week low.
In Germany, ZEW Economic Sentiment, a key event, fell from 38.5 points to 36.3, well off the estimate of 39.8 points. Eurozone ZEW Economic Sentiment fared much better, climbing from 30.6 points to 32.8 points. This beat the estimate of 31.8 points. German data continues to concern the markets, as the largest economy in the Eurozone has posted mixed releases recently, and the Eurozone economy will have little chance of recovering if Germany does not lead the way. Almost forgotten in all the excitement stirred up by the Federal Reserve was the release of the ECB Monthly Bulletin late last week. The ECB said it would maintain low rates and could even lower them if economic conditions warranted such a move. The ECB said it remained flexible and that inflation would be a key factor in future decisions. ECB policymaker Jens Weidmann echoed these sentiments, saying that the ECB’s monetary policy depended on the state of the Eurozone economy. Low ECB rates are bearish for the euro, as many investors could end up parking their funds elsewhere if the rates are more attractive than in the Eurozone.
EUR/USD July 17 at 23:20 GMT 1.3119 H: 1.3178 L: 1.3083
During the early hours of the Asian trading session on Thursday, the Euro is just easing back a little towards 1.31 after its surge towards 1.3180 over the last 12 hours. Since the middle of June, it has fallen sharply from new highs above 1.34, and has been looking to return back to the significant lows around 1.2800. Current range: trading right above 1.3110.
Further levels in both directions:
• Below: 1.3000.
• Above: 1.3200.
(Shows the ratio of long vs. short positions held for the EUR/USD among all OANDA clients. The left percentage (blue) shows long positions; the right percentage (orange) shows short positions.)
The EUR/USD long position ratio has moved back up to just above 40% level as the Euro has settled just above 1.31, after its surge higher last week. The trader sentiment remains in favour of short positions.
Economic Releases
- 08:00 EU Current Account (May)
- 08:30 UK Retail Sales (Jun)
- 12:30 CA Wholesale Sales (May)
- 12:30 US Initial Claims (13/07/2013)
- 14:00 US Leading Indicator (Jun)
- 14:00 US Philadelphia Fed Survey (Jul)
- EU ECB Governing Council hold non-rate setting meeting