Eur/usd - page 265
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EUR/USD: Dollar Sinks After Weak Retail Sales
US retail sales for April stayed subdued and came out at 0.0%, down from 1.1% in March. The control core gauge missed expectations of 0.5% and printed 0.0%, lower than 0.5% previously.
The pair was volatile and jumped around 50 pips and was seen around $1.1270 after the release.
GDP for the first quarter in the euro zone grew 0.4%, up from 0.3% in the last quarter, while the yearly change printed 1.0%, also higher than the 0.9% seen in Q4 2014.
Moreover,German GDP disappointed todayas the quarterly change came out at 0.3%, below estimates of 0.5%, while the year-on-year change printed 1.0% and missed expectations of a 1.2% print.
Euro zone finance ministers said during the Eurogroup meeting on Monday that progress in talks between Greece and its creditors had been made, but warned that "more time and effort are needed to bridge the gaps" on remaining issues.
Greece's Finance Ministry repaid a€750 million loan to the International Monetary Fundon Monday,a day earlier than originally scheduled.
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EUR / USD Close 1.1212 High 1.1279 Low 1.1134
The euro started 2015 with a break below the psychological level at 1.20. The price rebounded from 12-year lows at 1.0465. In case of breakouts the should follow support at 1.0240 and 1.0090 - bottom of 07.2002. If the direction of movement is reversed, more serious resistance can be expected at 1.1142, 1.1510 and 1.1940.
Price broke the resistance level at 1.1300 I had a planned buy position over the resistance level and I took my 40 pips. now price will be testing 1.13500.
Euro at 3-month highs against weaker dollar
The euro rose to three-month highs against the broadly weaker dollar on Thursday after soft data on U.S. retail sales disappointed expectations for a rebound in second quarter growth after a sharp slowdown in the first three months of the year.
EUR/USD was up 0.55% to 1.1415, the highest level since February 20.
The greenback weakened broadly after data on Wednesday showed that retail sales were flat in April and import prices were lower for a tenth straight month.
The data underlined expectations that the Federal Reserve will delay hiking rates until later in the year, after recent figures showed that the U.S. economy expanded just 0.2% in the first quarter.
The single currency was boosted as German and U.S. bund yields rose to the highest level in five months as a broad based selloff in global bond markets continued.
Germany 10-year bund yields rose to 0.712 on Thursday, the highest since early December.
German bund yields act as benchmarks for European financial markets and higher yields push the euro higher against the dollar. Yields rise as prices fall.
The dollar was at two week lows against the yen, with USD/JPY down 0.19% to 118.92.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was last down 0.45% to 93.32, the lowest level since January 22.
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Since the start of May the EURUSD rose more than 1.3% and is in a recovery phase since late April, trading above the 10-day moving average. Yesterday the currency rose after bouncing off the 10-day moving average with above average volume and close near the high of the day. Stochastic is showing bullish momentum and is above the 50 mid line.
Here's Why The Euro Rally Isn't Sustainable
Once the euro broke through support at 120—just like gold breaking through $1500—it's going to take years for this to recover. So don't fall for the delusion that the rally in the euro is sustainable. It's not. And it will be heading down to new lows soon:
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for now I am waiting a break over the resistance line 1.1400 which is formed on the daily and weekly chart.
This morning the euro managed to break the tip of May 7, heading to the next key resistance located around 1.1538, where is located the tip of 2 February. The upward movement of the euro seriously test the validity of long-term downtrend.
The couple turned to the trend line built on the tops of May 8, 2014, when he began the rise of the dollar. Breaking this level would be a strong signal for an end to the long-term downtrend, which is located couple of years ago.
It will go up a long as the % of short trades is greater than the % of long trades
The Great Euro Short Squeeze Continues
Thin trading conditions create the perfect environment for a short squeeze in currencies but when combined with fundamental drivers, the move can last longer than many would anticipate. Over the past month, EUR/USD climbed close to 900 pips with a third of those gains incurred over the past 2 weeks. Unlike other currencies, which had seen major position adjustments in recent weeks, there were still significant EUR/USD short positions going into this new trading week. As the disappointments in U.S. data continued to pour in, investors found less reason to remain short euros. At the same time, stops were slowly being triggered, forcing other traders out of the market. 1.15 is the key level for the currency as we suspect that the majority of stops are sitting above that rate. Europe still faces major political and economic challenges -- Greece created more headaches for the region Thursday after Finance Minister Varoufakis said he could ask for an emergency Eurogroup meeting to postpone their July and August debt repayments. We know that Greece is running out of cash fast and in 2 weeks' time they will be at the brink of default again. However the market had been positioning for a meltdown in Greece, ongoing weakness in Eurozone data and persistent strength in U.S. data for sometime so when the numbers started to surprise in the opposite direction, everyone began to question their views and some completely lost conviction as the EUR/USD continued to rise. There's no doubt that a weaker euro and Quantitative Easing from the ECB is helping Europe's economy but the currency pair is up 8.5% from its lows and there's bound be a reversal of influence if it remains near current levels. For the time being the flows are still on the side of the euro as the shorts continue to be squeezed. But Thursday's performance, which left EUR/USD off its highs, suggests that the rally has become overstretched and is beginning to lose momentum.
Dollar: Inflation vs. Jobs
The primary job of the Federal Reserve or most central banks for that matter is to maintain maximum employment and stable prices. According to the latest economic reports, U.S. policymakers are doing a decent job with stimulating the labor market but deflation could be roaring its ugly head. Jobless claims continued to fall with the 4-week moving average dropping to its lowest level in almost 15 years. Producer price growth on the other hand turned negative, dropping 0.4% when economists had been looking for a 0.1% rise. Excluding food and energy costs, prices fell 0.2%. While progress on one part of their mandate is encouraging, the recent downturn in other U.S. economic reports and the decline in price pressures mean no rate hike in June. We never expected the Fed to tighten next month but we were hoping that they would set the stage for a move in September. However if data continues to miss, they may refrain from signaling a change in monetary policy 3 months forward. As Fed President Williams suggested, every meeting is in play and they could adjust the FOMC statement in July or August if the economy gains traction. Rate-hike expectations have shifted dramatically and the market is now pricing in a greater than 50% chance of the first rate hike happening in December versus September. While both of these meetings are months away, the Fed will want to preannounce the move to avoid a major reaction when rates are increased. More U.S. data is scheduled for release on Friday and even if they surprise to the upside, we'll need to see a series of data improvements before the dollar regains its bid.
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