EUR/USD

EUR/USD is not showing much movement on Tuesday, as the high-flying euro continues to trade in the mid-1.37 range. In economic developments, ZEW Economic Sentiment data from Germany and the Eurozone sparkled, as both climbed to multi-year highs. In the US, today’s key event is Core CPI, with the markets expecting another weak reading for November.

German ZEW Economic Sentiment, a key indicator which gauges investor confidence, jumped to 62.0 points in November, up from 54.6 the previous month. This easily beat the estimate of 55.3. The Eurozone ZEW Economic Sentiment followed suit, rocketing to 68.3 points, compared to 60.2 points in October. This crushed the estimate of 60.9. Meanwhile, inflation was up slightly, as Eurozone CPI and Core CPI both posted gains of 0.9%. However, this is well below the ECB target of about 2.0%, as weak inflation continues to hobble economic growth in the region.

All eyes are focused on the US Federal Reserve, which meets for a two-day policy meeting starting on Tuesday. The million dollar question is whether the Fed will taper QE. Although there’s a stronger likelihood that the Fed will wait until after the new year, Bernard Bernanke’s swan song could surprise the markets if the Fed does take QE action this week. Currently, the Fed is purchasing $85 billion in assets every month, and a Fed taper will likely boost the US dollar against the major currencies.

There was some good news on the fiscal front last week, as the US House of Representatives easily passed a budget deal on Thursday. The agreement, which will be voted on by the Senate this week, removes the risk of another government shutdown next month and reduces the deficit by a modest $23 billion. Democrats and Republicans both had criticism of the proposal, but there is general agreement in Washington that the compromise reached is a positive step which removes some of the fiscal uncertainty we’ve seen in recent months.

EUR/USD for Tuesday, December 17, 2013

EUR/USD December 17 at 12:00 GMT

EUR/USD 1.3759 H: 1.3782 L: 1.3752

EUR/USD Technical

• EUR/USD is showing little movement in Tuesday trading. The pair edged higher in the Asian session but retracted in European trading.
• On the downside, 1.3649 continues to provide support. This line has some breathing room as the pair trades at higher levels. This is followed by support at 1.3585.
• The pair faces resistance at 1.3786. This is a weak line which could face pressure if the euro resumes its upwards movement. This is followed by a resistance line at 1.3893, which has remained intact since October 2011.
• Current range: 1.3649 to 1.3786

Further levels in both directions:

• Below: 1.3649, 1.3585, 1.3500, 1.3410 and 1.3325
• Above: 1.3786, 1.3893, 1.4000 and 1.4140

OANDA’s Open Positions Ratio

EUR/USD ratio is unchanged in Tuesday trading, continuing the trend we have seen since the start of the week. This is reflected in the pair, which is showing little activity. A large majority of the open positions are short, indicative of a trader bias towards the dollar posting gains against the euro.

The pair has been very quiet on Tuesday. With the US releasing key inflation numbers later on, we could see an increase in movement from USD/CAD during the North American session.

EUR/USD Fundamentals

• 10:00 German ZEW Economic Sentiment. Estimate 55.3 points. Actual 62.0 points.
• 10:00 Eurozone ZEW Economic Sentiment. Estimate 60.9 points. Actual 68.3 points.
• 10:00 Eurozone CPI. Estimate 0.9%, Actual 0.9%.
• 10:00 Eurozone Core CPI. Estimate 1.0%, Actual 0.9%.
• All Day – Eurogroup Meetings.
• 13:30 US Core CPI. Estimate 0.1%.
• 13:30 US CPI. Estimate 0.1%.
• 13:30 US Current Account. Estimate -101B.
• 15:00 US NAHB Housing Market Index. Estimate 55 points.

*Key releases are highlighted in bold

*All release times are GMT