EUR/USD losses against U.S. moving below 1.3000 level.
Daily Technical Analysis:
EUR/USD has tested SMA5 yesterday. SMAs are now moving and contracting in bullish sequence, with market is moving between SMA5 and SMA10.
RSI is showing decreased bullish strength with 73% reading. RSI is moving in uptrend above 70%, where it may take correction.
Upper and lower bands are contracting, while Middle Band is moving upward with expended bands. It signals that market is decreasing bullish volatility. Market is moving slightly below upper band.
With Lutfi Magnet theory market is 65% bullish and with adjustments 56% bullish. Lutfi Magnet Theory and Adjustments are showing bullish sentiment.
On the basis of Technical Analysis initial bias is bullish with a further downward correction. With a corrective move below weekly magnet at 1.3015, market may attempt yesterday low at 1.2992 and break there may extend to low at SMA10 1.2968 and then to support level at 1.2930. While on higher side, sustained move above SMA5 at 1.3076 may extend move to test Resistance at 1.3092.
The euro held steady against the dollar on Thursday as investors took in conflicting U.S. housing data and ongoing European uncertainty, buying and selling both currencies while digesting the Bank of Japan’s decision to expand its stimulus programs and weaken the yen.
The National Association of Realtors reported that existing home sales in the U.S. rose by 7.8% to a seasonally adjusted 4.82 million units in August, surpassing market expectations for a 2% increase to 4.55 million units.
Groundbreaking on new homes, however, rose less than expected in August, while building permits issued declined.
In a report, the U.S. Census Bureau that U.S. housing starts rose by 2.3% in August to a seasonally adjusted 750,000, below expectations for an increase to 765,000.
The report also showed that the number of building permits issued in August fell 1% to a seasonally adjusted 803,000, compared to expectations for a decline of 1.8% to 796,000.
While investors agreed the data showed continued improvement in U.S. housing, most agreed it is still way too early to claim victory for the sector.
Meanwhile in Europe, reports surfaced that German lawmakers are seeking to water down proposals for a European banking union and supervision of eurozone banks by the European Central Bank.
Here is schedule for today’s important data:
Spanish 10 Year Bond Auction: Tentative. Spain will test the mood of the markets with this auction of benchmark bonds. Spain has seen significant improvements in the secondary market, and it hopes to pay a lower price in the primary market.
German PPI at 11:00am. The next potential rate cut of the ECB also depends on inflation, especially in Germany. In the past 4 months, producer prices came out below expectations. Prices remained flat last month.
Flash PMIs, begins in France at 12:00pm, continues in Germany at 12:30pm and ends with the all European figure at 01:00pm. These purchasing managers’ indices are forward looking indicators and are highly correlated to GDP, making them very important. All the indicators are below the 50 point mark separating growth from contraction.
Consumer Confidence at 07:00pm. The official Eurostat survey is usually quite steady. So, the recent drop from -22 to -25 was quite a disappointment. A small improvement is likely now. The negative number reflects consumer pessimism.
US Unemployment Claims at 05:30pm. The number of Americans filing initial claims for unemployment benefits edged up to the highest level in two months, reaching 382,000 claims, way above forecasts. The sharp rise of 15,000 claims was partly due to Hurricane Isaac, however this rise was worrisome enough for the Federal Reserve to warrant an open ended QE of $40 billion in Mortgage backed securities per month and low rates until 2015. A drop to 370,000 is forecasted now.
US Philly Fed Manufacturing Index at 07:00. The Philadelphia area manufacturing sector improved to -7.1 in August following -12.9 the preceding month. Economists expected the index to reach -5. Weaker demand from the EU and China as well as lower investments, hurt US factories. Another improvement to -4.1is anticipated this time.
EUR/USD started the day at 1.3046. After attempting slight high at 1.3084, it moved downward to low at 1.2992. The pair closed week at 1.3047.
Today the Euro opened the day at 1.3046