Daily review EUR/USD (19 April 2013)
April 19, 2013 11:14 am GMT+0 in Forex Analysis
Fundamental analysis - The euro is relatively steady against the dollar this morning, trading in a narrow range at $1.3050-$1.3075, slightly higher from its Wednesday’s low, when it plummeted from $1.3191 to $1. 3011.
Comments by German central bank governor Weidmann slumped investors’ confidence in the euro, which caused an immediate impact on its chart movement on Wednesday. Jens Weidmann signalled that the ECB could lower its interest rate and increase the size of the financial stimulus if incoming data triggers the need.
The risk of increasing the cash circulation in the Eurozone caused most market participants to close their positions in euros, which led to an avalanche-like behaviour and raised the bets against the single currency.
German economic results this morning failed to significantly boost the euro as the report showed disappointing figures in the Producer Price Index on both annually and monthly basis. The actual results did not match economists’ expectations and the index rose to the modest 0.4% for the year, while registering a decline by 0.2% in March.
Meanwhile, the dollar also experienced pressure after weak US economic data showed that the Philadelphia Fed Manufacturing index has dropped to 1.3 in April, opposite to expectations for an increase to 3.0. Further disappointment came from the Department of Labor, as it revealed a rise in the number of people filing for initial unemployment benefits to 352,000, from 348,000 in the previous reading.
The currency pair is expected to trade in a relatively low volatility for the rest of the day, close to the $1.3060-$1.3090 range as no significant data is due to be released for both the Eurozone and the US.
At yesterday’s session, the euro rose against the dollar from 1.3015 to 1.3090. This morning the currency pair was trading at 1.3045-1.3070.
Should the euro overcome the resistance zone at 1.3070-1.3090, its aim will be reaching and testing the zone at 1.3105-1.3130. If successful, the upward trend will continue to 1.3150-1.3170. If it falls below the support zone at 1.3060-1.3035, it will seek further support in the1.3005-1.2980 zone. In case of a breakdown, the downward trend will continue to 1.2955-1.2935.
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