Interesting to see tomorrow's FOMC.
Yesterday the EURUSD fell and close near the low of the day with a narrow range, although held its ground just above the 10-day moving average. Absent economic releases in the euro area today so we might experience some consolidation, as inflation figures in the US economy are due tomorrow and the FOMC will release its minutes.
EUR/USD: Euro Wanders Around $1.1070, Awaits Impetus for Direction
The pair was trading with minimal volatility during the London session on Tuesday and was seen somewhat lower on the day, changing hands around $1.1060 as there were no economic news to set the direction.
Later in the session, US housing data will be published, specifically building permits and housing starts for July, although traders should not react in a volatile way.
From the euro point of view, the first important data will be released on Friday, specifically flash manufacturing PMIs from individual countries and for the whole euro zone. Figures are not expected to cause any major movements on euro pairs either as they are not so closely watched.
According to the CFTC and Rabobank's research, net EUR shorts extended in the wake of the Chinese devaluation last Tuesday. Spot activity later in the week, however, suggests that the EUR subsequently found greater support, while USD longs climbed a little higher prompted by the as expected but solid US July labor report. However, as the value of the CNY fell further during the middle of last week, speculation of a September Federal Reserve policy move was pared back and this impacted the value of the USD on the spot market.
"Negative developments overseas are continuing to support a broad-based strengthening of the US dollar. The stronger US dollar and the ongoing decline in the price of crude oil through its negative impact on capital spending are providing headwinds to growth in the US manufacturing sector. The sharp drop yesterday in the latest Empire survey for August which reached its lowest level since June 2009 provided a worrying signal that activity in the manufacturing sector appears to have deteriorated further," analysts at Bank of Tokyo-Mitsubishi wrote in a note on Tuesday.
The technical outlook is neutral as the pair needs to break the lower band of the trend line if bears want to start building any significant momentum.
EUR/USD almost reached 1.1000 today and it will likely test that support for a while. Should it manage to break below that level it will likely continue towards the next support level visible on the daily filter chart, which is at 1.0850.
EUR/USD is testing fibo level 23.6% at 1.0980 a break below will open a chance for a sell position.
The euro recorded a losing session against the dollar on Tuesday. The bearish trend continues for third consecutive day and as a result of this the support at 1.1049 has been broken, as the pair finished below these levels. Despite the weak performance of the single currency in the short term is expected price adjustment and test the resistance at 1.1214. Trading on Tuesday launched at a rate of 1.1076 as at the beginning of the trend was neutral. EUR began to lose positions around noon and bottomed at 1.1017. The session ended with only 3 pips above.
Euro Zone Current Account Surplus Widens in June
The euro zone current account surplus increased considerablyin the sixth month of the year when compared to the previous month on a seasonally adjusted basis, data from the European Central Bank (ECB) showed on Wednesday.
The euro zone's current account recorded a rise in its surplus to €25.4 billion in June, seasonally adjusted, compared with a revised €19.1 billion in the previous month, according to the ECB's report.
On a non-seasonally adjusted basis, meanwhile, the measure, which indicates the net flow of current transactions including goods, services and interest payments into and out of the currency bloc, widened to €31.1 billion, compared with a revised €4.3 billion reported in the previous month.
Back in January the gauge climbed to the second-highest on record, coming in at €30.4 billion, only surpassed by last September's €32 billion surplus.
The gauge is crucial for the long-term confidence of investors and trading partners, tracking the sum of the balance of trade (goods and services exports less imports), net income from abroad and net current transfers.
A positive current account balance indicates that the entity is a net lender to the rest of the world, while a negative current account balance indicates that it is a net borrower from the rest of the world.
Yesterday the EURUSD pair fell for the straight third day and closed in the red near the low of the day, shy below the 50-day moving average. All eyes now turn to the US as the market waits for the Fed's Monetary Policy Statement later today, regarding the possibility of an interest rate hike in September.
Eurozone construction output June -1.9% vs +0.2% prev
Latest EZ construction data now out
Not good news but not major league data but one to keep on file for overall appraisal
-2.3% yy is a disaster - obviously FED is not going to hike rate or else Euro would fall as a rock