• 706 days Will The ECB Continue To Hike Rates?
  • 707 days Forbes: Aramco Remains Largest Company In The Middle East
  • 708 days Caltech Scientists Succesfully Beam Back Solar Power From Space
  • 1,108 days Could Crypto Overtake Traditional Investment?
  • 1,113 days Americans Still Quitting Jobs At Record Pace
  • 1,115 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 1,118 days Is The Dollar Too Strong?
  • 1,118 days Big Tech Disappoints Investors on Earnings Calls
  • 1,119 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 1,121 days China Is Quietly Trying To Distance Itself From Russia
  • 1,121 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 1,125 days Crypto Investors Won Big In 2021
  • 1,125 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 1,126 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 1,128 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 1,129 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 1,132 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 1,133 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 1,133 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 1,135 days Are NFTs About To Take Over Gaming?
  1. Home
  2. Markets
  3. Other

EUR/USD: At Key Resistance Lines

Technical and fundamental factors seem to support EUR/USD falling to 1.36/1.32 over the medium term.


Europe: Recovering, but not so fast

During April's meeting, the European Central Bank (ECB) postponed to the coming months any decision on rate. However, Mr. Draghi said quantitative easing is a possibility, since the bank does not want inflation to stay too low for too long. In March, it was 0.5%, the lowest level since 2009. Prices also are falling in Portugal, Spain, and Greece. They remained stable in Italy and France. A strong euro does not help, since companies are pressured to cut costs and/or reduce margins. The Council recognizes tangible improvements in economic growth. Nonetheless, recovery remains mild and unemployment high, supporting a persistent accommodative scenario. EUR/USD finds various levels of resistance, from 1.3850-1.40. It could withhold current upside pressure, considering the divergence of price and Relative Strength Indicators (RSIs) on the weekly/daily charts, and re-address prices toward 1.36 and, eventually, 1.32 in the medium term.


U.S. unemployment still an issue

During a speech in Chicago, Fed Chair Janet Yellen confirmed that unemployment still is a priority. Labor "underutilization," which is higher than 2001, recessionary levels, is the main focus. In fact, there still are a larger number of people working part time, despite wanting full-time work. In addition, finding work could require more than six months. The study of cycles seems to anticipate that unemployment will bottom out sometime in 2014 and then will rise again toward the highs of the final, third wave. The private sector still is repaying debt, and consumption is under performing. Gross domestic product (GDP) growth from 2010-2013 (1.5%) was less than growth from 2003-2006 (2.2%). On the other hand, U.S. companies are doing much better, as external demand is supportive. The Fed will keep its bond-buying program unleashed, and this should support the dollar over the coming months.

 

Back to homepage

Leave a comment

Leave a comment