EUR/USD: Starts Off Week With Little Movement

After rising to eight-month highs last week, EUR/USD is showing little change as we start the new trading week. The pair is trading in the high-1.36 range in Monday’s European session. With the crisis in Washington over, the markets can again focus on economic releases. On Monday, German PPI posted a gain of 0.3%, beating the estimate. Today’s highlight is US Existing Home Sales. The markets will also be keeping a close eye on Non-Farm Payrolls, which will be released on Tuesday.

Inflation indicators continue to point to weak inflation in the Eurozone. This trend continued on Monday, as German PPI which posted a gain of 0.3%. This was the index's first gain since January. Other inflation indicators have been weak, pointing to slow economic activity in the region. ECB President Mario Draghi has voiced concern about weak inflation, but there seems little that the ECB can do to solve the problem.

After a bitter political struggle which saw the US on the brink of a sovereign default, the Republicans and Democrats finally reached an agreement last week to reopen the government and raise the debt ceiling. However, the deal provides short-term relief only - the government will be funded until January 15, while the debt limit will be raised until February 7. So, we could be right back where we started in just a few months. The dollar initially gained ground after the agreement was announced, but was broadly lower as optimism faded. On Friday, EUR/USD touched above the 1.37 line, an eight-month high.

The recent government shutdown cancelled some US economic releases, notably Non Farm Payrolls, one of the most important employment releases. The September report was supposed to be released in early October, but has been rescheduled for release on Tuesday. The NFP release could have a major impact on EUR/USD. Meanwhile, last week's Unemployment Claims came in at 357 thousand, very close to the estimate of 358 thousand. This figure was an improvement from last week, but still well above previous releases. The shutdown inflated the release, as hundreds of thousands of Federal employees were laid off. This week's estimate is lower, with an estimate of 341 thousand.
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EUR/USD October 21 at 11:00 GMT

EUR/USD 1.3678 H: 1.3686 L: 1.3666
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EUR/USD is showing little movement in Monday trading, as the pair trades in the high-1.36 range.

The pair is facing resistance at 1.3786. This is followed by resistance at 1.3893, which has held firm since October 2011.

EUR/USD continues to receive weak support at 1.3649. This is followed by stronger support at 1.3585.

Current range: 1.3649 to 1.3786

Further levels in both directions:

Below: 1.3649, 1.3585, 1.3500, 1.3410 and 1.3335
Above: 1.3786, 1.3893, 1.4000 and 1.4143

OANDA's Open Positions Ratio

EUR/USD ratio is showing movement towards short positions on Monday. This is consistent with the movement of the pair, as the euro has edged lower against the dollar. The ratio continues to be dominated by short positions, indicating a strong trader bias towards the US dollar posting gains against the euro.

After strong gains last week, the euro remains strong, as the pair trades close to the 1.37 line. With the US releasing key housing data later in the day, we could see some movement from the pair in the North American session.

EUR/USD Fundamentals

6:00 German PPI. Estimate 0.1%. Actual 0.3%.
Tentative - German Buba Monthly Report.
12:00 FOMC Member Charles Evans Speaks.
14:00 US Existing Home Sales. Estimate 5.31M.
14:30 US Crude Oil Inventories. Estimate 3.4M.

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