In the last 24 hours the Euro has reversed again and resumed its downwards move from the last week moving down towards 1.29, and in the process a one month low. It has also become evident over the last couple of days, especially on the 4 hourly chart below, that the 1.30 level is now providing some resistance and placing pressure on price. The Euro finished last week moving back down through the long term key level of 1.30. It did spend the last couple of weeks trading right around the 1.31 level and finding support and resistance at 1.30 and 1.32 respectively, however the former level has now been broken. In finishing last week below 1.30, it moved to levels not seen in over a month. Over the last month the 1.32 level has become quite significant and has been an obstacle to the Euro moving higher (evident in the right half of the daily chart below). During this time, it has had some periods of little movement followed by sharp bursts.
A couple of weeks ago, the Euro exhibited a classic pin bar reversal candlestick pattern which was indicating the significant selling pressure it experienced at any price above the 1.32 level and likely lower prices to follow. This reinforced the significance of the 1.32 level and how it was going to take considerable effort to move through there. On this pin bar, it moved to near 1.325 and to its highest level in more than two months, since the end of February when it was falling heavily from up near 1.34. Just as quickly, it has fallen away and now moved down to the one month low below 1.30. Prior to that, it was quiet and spent the most part of two weeks ago trading within a narrow range between 1.30 and 1.31, which reinforced how significant this two cent range was. In the middle of April the Euro surged up towards 1.32 and ran into a wall of resistance at that level, to then be followed by a sharp fall back towards the then support level at 1.30.
Over the last month the Euro has done well to weather the storm through February and March which saw it fall sharply from around 1.37, although its decline over the last few days may be reversing this good fortune. Despite its strong rally in the first half of April, it was only a few weeks ago that the Euro dropped to its lowest level since the middle of November around 1.2750, so it did very well of late to move back strongly above 1.30, despite its recent lapse. The Euro has spent the best part of the last month consolidating above the key 1.30 and 1.29 levels after its decline throughout February. Over the last couple of weeks, the 1.30 level has been called upon again to prop up price, although it may have reversed roles now as it is providing some resistance to movement higher. Sentiment has completely changed with the Euro and the last couple of months has seen a rollercoaster ride for the Euro as it continued to move strongly towards levels not seen in over 12 months above 1.37 before falling very sharply to below 1.28 and setting a 14 week low a month ago.
The Euro moved lower after the release of disappointing German data, particularly ZEW Economic Sentiment, which was way below the estimate. Today’s Eurozone numbers looked better, as Industrial Production climbed up and ZEW Economic Sentiment was within expectations. German releases have improved in recent readings, but any expectations that we would see the positive trend continue on Tuesday were dashed. Inflation numbers looked weak, as Final CPI declined by 0.5%, matching the forecast. WPI also lost ground, dropping by 0.2%, but this bettered the forecast of -0.3%. The disappointment of the day was German ZEW Economic Sentiment, one of the most important German economic indicators. It posted a reading of 36.4 points, well below the estimate of 39.5 points. Today’s Eurozone releases were stronger, as Industrial Production climbed to 1.0%, beating the estimate of 0.6%. Eurozone ZEW Economic Sentiment came in at 27.6 points, edging out the forecast of 27.3 points. The euro lost ground after the weak German numbers, and was trading in the 1.2980 range in the European session.
EUR/USD May 15 at 00:30 GMT 1.2933 H: 1.3029 L: 1.2914
EUR/USD Technical" title="EUR/USD Technical" width="597" height="80">
During the early hours of the Asian trading session on Wednesday, the Euro is consolidating in a narrow trading range right around 1.2930 after having recently moved down towards 1.2900 and bounced off. Since the start of February, it has fallen sharply from new highs above 1.37, although it has experienced some strong rallies in that time trying to claw back lost ground. Current range: trading right around 1.2930.
Further levels in both directions:
• Below: 1.2900 and 1.2800.
• Above: 1.3000, 1.32000 and 1.3300.
(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 risen sharply in the last couple of days as the Euro has fallen back down below 1.30. The trader sentiment has shifted and is now in favour of long positions.
Economic Releases
- 01:30 AU New motor vehicle sales (Apr)
- 01:30 AU Wage Price Index (WPI) (Q1)
- 05:00 JP Consumer Confidence (Apr)
- 08:30 UK Average Earnings (incl. bonus) (Mar)
- 08:30 UK Claimant Count Change (Apr)
- 08:30 UK Claimant Count Rate (Apr)
- 08:30 UK ILO Unemployment Rate (Mar)
- 09:00 EU GDP (1st Est.) (Q1)
- 09:30 UK BoE Releases Quarterly Inflation Report
- 12:30 CA Manufacturing sales (Mar)
- 12:30 US Empire State Survey (May)
- 12:30 US PPI (Apr)
- 13:00 US Net Long-term TICS Flows (Mar)
- 13:15 US Capacity utilisation (Apr)
- 13:15 US Industrial production (Apr)
- 14:00 US NAHB Builders survey (May)