EUR/USD April 10 – Climbing Higher as Euro Crosses 1.31

ERU/USD is continuing this week’s upward trend, as the pair has climbed above the 1.31 in Wednesday’s European session. Eurozone numbers were a mix to start off the day, as French Industrial Production edged above the estimate, while Italian Industrial Production dropped to a three month low. In the US, the markets will get a look at the FOMC Meeting Minutes, which could be a market-mover.

Here is a quick update on the technical situation, indicators, and market sentiment that moves euro/dollar.

EUR/USD Technical

• Asian session: Euro/dollar was steady, touching a high of 1.3091, and consolidating at 1.3078. The pair has crossed above the 1.31 line in the European session.
• Current range: 1.31 to 1.3130.

Further levels in both directions: 

• Below: 1.31, 1.3050, 1.30, 1.2960, 1.2880, 1.2805, 1.2750, 1.2660, 1.2624 and 1.2587.
• Above: 1.3130, 1.3170, 1.3290, 1.3350 and 1.34.
• 1.3130 is a weak resistance line. It is followed by 1.3170.
•  1.31 is providing support. 13050 is stronger.

Euro continues push as it crosses 1.31 – click on the graph to enlarge.

EUR/USD Fundamentals

• 6:45 French Industrial Production. Exp. 0.6%. Actual 0.7%.
• 8:00 Italian Industrial Production. Exp. -0.4%. Actual -0.8%.
• 14:30 US Crude Oil Inventories. Exp. 1.6M.
• 17:00 US 10-year Bond Auction.
• 18:00 US FOMC Meeting Minutes.
• 18:00 US Federal Budget Balance. Exp. -110.3B.

For more events and lines, see the Euro to dollar forecast

EUR/USD Sentiment

• German numbers point up: With Eurozone numbers continuing to look weak for the most part, there is a ray of sunshine, as German releases are showing better numbers. Last week, German Factory Orders jumped 2.3%, after a decline the previous month. This easily beating the forecast of 1.2%. The good news continued this week, as German Industrial Production improved by 0.5%, edging past the forecast of 0.4%. On  Tuesday, German Trade Balance hit a six month high, posting a surplus of 17.1 billion euros. This was well above the estimate of 16.2 billion euros. If the Eurozone is to turn the corner, it will need Germany, the largest economy in the zone, to lead the way to recovery. Stronger German numbers should lead to better Eurozone readings, which have been anything but impressive so far in 2013.
• Euro keeps on rolling: The Cyprus bailout crisis is not yet behind us, the Eurozone is suffering from a sputtering economy and high unemployment, and even ECB head  Mario Draghi toned down his usual optimism at last week’s ECB press conference. Sounds like a recipe for a weaker euro? Evidently not, as the euro continues to soar against the dollar, having gained about three cents since the beginning of April. The euro has received a boost from a long string of weak US numbers, as well as some positive data out of Germany this week. However, the severe problems in the Eurozone will not disappear anytime soon and could put a damper on the euro’s current rally.
• Portugal Court Strikes Down Austerity Package: Portugal was back in the news as the country’s Constitutional Court struck down some austerity measures that the government announced earlier this year. The measures are part of a  bailout package that Portugal received in 2011. The court invalidated steps that included tax hikes worth 5 billion euros, which has left the country 1.4 billion euros short in expected revenue. The economy contracted 3.2% in 2012, and Portugal is behind in its deficit reduction targets. The legal wangling could exacerbate the country’s difficult economic situation and lead to a full-blown crisis, which is the last thing the Eurozone needs.
• US numbers continue to falter:  The US continues to churn out disappointing numbers, and every key release over the past two weeks has fallen below expectations. The data comes from across the economy - manufacturing, housing, consumer confidence and employment numbers have all missed their estimates. Employment numbers were dismal, and have helped the euro post impressive gains against the US dollar. this week. Has the US recovery stalled? The US hasn’t released any key fundamentals so far this week. Unemployment Claims will be released on Thursday, and additional major releases are scheduled for Friday. If the US can turn things around and post some stronger numbers, we could see the dollar improve after losing a lot of ground to the euro since last week.

-->