EUR/USD

The euro is listless in Friday trade, as EUR/USD remains stuck in the low-1.38 range in the European session. The pair showed little reaction to key US numbers on Thursday, as Unemployment Claims jumped while Core Durable Goods Orders hit an eight-month high. In the Eurozone, ECB head Mario Draghi said that the exchange rate was an important factor in the ECB’s monetary policy. On the release front, the week wraps up on a quiet note, with today’s highlight being UoM Consumer Sentiment.

The ECB has been under increasing pressure to take action as inflation remains in the doldrums in the Eurozone and the euro continues to trade at high levels. On Thursday, Draghi took note of the high euro exchange rate, calling it an “increasingly important factor” in monetary policy. He hinted that the central bank’s monetary policy stance could change if the euro continues to gain in value. When the euro appeared headed to the 1.40 level several weeks ago, Draghi was able to “talk down” the currency. Will this play work a second time? Draghi also stated that an asset purchase program could be introduced if the inflation outlook worsens.

On Thursday, key US releases pointed in both directions. Unemployment Claims jumped to 329 thousand, its highest level since mid-February. This was much higher than the estimate of 309 thousand. There was much better news from the manufacturing front, as Core Durable Goods Orders jumped 2.0% in March, crushing the estimate of 0.6%. This was the key indicator’s best showing since September 2012. Durable Goods Orders kept up the fast pace with a sharp gain of 2.6%, beating the estimate of 2.1%.

There was good news out of Germany on Thursday, as Ifo Business Climate continues to cruise at high levels. The key indicator improved to 111.2 points, beating the estimate of 110.5. The indicator has been above the 110 level throughout 2014, indicating strong optimism in the business sector with regard to the German economy. German data can have a strong impact on EUR/USD, as Germany is the Eurozone’s largest economy.

In the US, the housing sector continues to sputter. New Home Sales was a disaster, as the key indicator plunged to 384 thousand in March, down from 440 thousand in the previous release. The weak reading was nowhere near the estimate of 455 thousand, and marked an eight-month low for the key housing indicator. Earlier in the week, Existing Home Sales showed a slight drop in March, although the indicator did manage to beat the forecast.

EUR/USD for Friday, April 25, 2014

EUR/USD April 25 at 8:00 GMT

EUR/USD 1.3839 H: 1.3839 L: 1.3827

EUR/USD Technical

• EUR/USD is quiet in Friday trade.
• 1.3786 is providing support. 1.3649 is next.
• 1.3893 is providing resistance. This is followed by the key level of 1.40, which has not been breached since October 2011.
• Current range: 1.3786 to 1.3893

Further levels in both directions:

• Below: 1.3786, 1.3649, 1.3585, 1.3410 and 1.3335
• Above: 1.3893, 1.4000, 1.4149 and 1.4307

OANDA’s Open Positions Ratio

EUR/USD ratio is pointing to short positions in Friday trading, reversing the direction seen a day earlier. This is not consistent with the movement we are seeing from the pair, as the euro has edged higher. The ratio is made up of short positions, indicative of the dollar reversing its downward trend and moving higher.

EUR/USD remains at high levels, but is showing little activity. The dollar is steady in the European session.

EUR/USD Fundamentals

• 13:00 Belgian NBB Business Climate. Estimate -2.3 points.
• 13:45 US Flash Services PMI. Estimate 56.2 points.
• 13:55 US Revised UoM Consumer Sentiment. Estimate 83.2 points.
• 13:55 US Revised UoM Inflation Expectations.

*Key releases are highlighted in bold

*All release times are GMT