Eur/usd - page 237
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bearish trend continue today and soon 1.0000
EUR/USD slips below 1.07, as forecasts for parity moved up to end of '15
The euro slipped below 1.07 against the U.S. Dollar on Tuesday reaching an 11-year low, as uncertainty of the euro zone's bond buying program combined with expectations of an imminent interest rate hike by the U.S. Federal Reserve pushed investments overseas.
EUR/USD lost 0.13% or 0.014 in late afternoon trading to 1.0682 on Tuesday. The pair continued to weaken, as the U.S. Dollar Index reached a 12-year high at 98.62. The index measures the greenback versus a basket of six other major currencies.
For importers in the euro zone, there are mounting fears that the currency will drop even lower. On Tuesday, Deutsche Bank (XETRA:DBKGn), the largest bank in Germany revised its forecast for euro-dollar parity. Deutsche Bank forecast that EUR/USD will reach parity at the end of this year; previously the bank predicted it would occur at the end of 2016. On a long term basis, Deutsche Bank predicts that EUR/USD will reach 85 cents by 2017?down from previous forecasts of 95 cents at that point.
The developments on Tuesday came hours after Federal Reserve Bank of Dallas president Richard Fisher's comments in a speech before Rice University's Baker Institute for Public Policy. In his remarks, Fisher warned of a recessionary risk that could ensue if plans to raise interest rates are delayed even further.
"Every time the Fed has tightened policy after achieving full employment it has driven the economy into recession," Fisher said. "It's because of this dynamic and my desire to prolong current expansion that I have argued that we should begin reducing policy accommodation earlier than many of my colleagues on the Federal Open Market Committee appear to prefer."
Currency traders await further talks between Greece and its euro zone creditors, which are set to resume on Wednesday in Brussels. Negotiations hit a snag between the sides on Monday when the group of the euro zone finance ministers emphatically rejected Greece's proposed reform measures that are seen as a prerequisite to extend its bailout package.
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On Yesterday session the EURUSD plunged breaking below 1.07 for the first time in 8 years on the beginning of bond buying program in the Euro Zone. The prospect is to continue selling the EURUSD eying two key levels 1.05 and 1.04.
EUR/USD: the big picture – guide to the next low levels
EUR/USD has been trading in a downwards trajectory, to say the least. After forming a very temporary base at 1.0560, the pair extended ts falls and hit a new 12 year low at 1.0511. This was a low point back in March 2003 as well as a high line December 2002. Yes, 2002 and 2003, not 2012 nor 2013.
What are the levels to watch out for?
EUR/USD downfall
As the monthly chart below shows, 1.05 is still significant support, and the lines below, dating to the beginning of the millennium, don’t offer too much before the magical line of EUR/USD parity.
We already mentioned that after the break of 1.0760, there wasn’t too much on the way to 1.05. So far, this month of March has proved to be devastating for the common currency (and quite good for the euro-zone, thank you very much).
EUR/USD fell from around 1.12 to 1.0511 as a low. And below, we have some support at 1.0360: this was the low point in January 2003.
Further down, 1.0170 worked as resistance back in November 2012. It is close to the swing high of 1.0208 seen in July of that year.
EUR/USD parity story
A first attempt on EUR/USD parity was first seen in June 2002. The pair then continued up, way above this level and back down to a low of 0.9606 seen in September and October of that year. Only in December 2002, the pair shot higher, and this time it never looked back.
The euro was launched as an official currency back in 1999. The launch value was 1.17 and the pair rose higher on the first day of trading.
However, by the end of that year, one euro was already meeting one dollar. In early 2000, the pair continued deteriorating and lost the parity line, extending the moves from the second millennium to the third one.
The all time low of 0.8220 was seen in October 2000, where the pair bottomed out and began some trade ranging. When the currency was officially launched as physical bills and coins in January 2002, the value against the dollar was still still low, in the 80 cents region. But from there, it began rising.
Will it look down to parity now? We shall see.
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EUR/USD: Euro Shakes Off Intraday Lows as Dollar Bulls Rest
The euro edged higher against the US dollar and rebounded from intraday lows seen earlier as the greenback's bulls took a breather and let the currency weaken against most of its major peers.
The euro rose 0.42% and traded at $1.0589 against the US dollar, rebounding from a fresh 12-year low hit in the Asian session.
The 19-nation bloc currency has come under increased pressure this week, as the launch of ECB's quantitative easing and ongoing USD demand after the impressive US February employment report became a toxic mix for the currency pair.
"The decision by the ECB to purchase negative yielding European bonds was an unexpected development and this has certainly helped accelerate the decline seen in the past few days, and given that today’s German, French and Spanish inflation numbers are not expected to show much in the way of signs of a change in terms of direction, further downside pressure seems likely, particularly since the prospect of a Greek exit continues to rise day by day," said Michael Hewson, chief market analyst at CMC Markets UK.
As analysts point out, the euro's downward trend is likely to continue, especially if Federal Reserve officials decide to change the language with respect to the potential timing of US rate rises during next week’s FOMC meeting.
"Other factors could well accelerate this decline in the euro, in particular next week’s FOMC meeting with some heavy briefing from some Fed officials that could well see the language change at the upcoming meeting with respect to the potential timing of US rate rises," he added.
"The euro continues to close in on the 1.0500 level, after this week’s slide below 1.0800. A break below here has the potential to open up a move towards parity. To stabilize we would need to see a move beyond 1.0800 initially and then the resistance at the 1.1250 area. Only a move back through 1.1270 re-targets the 1.1450 area and last week’s high," Hewson also noted.
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Since the beginning of this year EURUSD has fallen more than 12.5% and downward momentum is increasing. The pair fell during yesterday session hitting 1.051 a fresh twelve-year low, without even stopping to breathe. Expecting downward move to a Fibonacci extension at 1.0308 on a break below previous day low at 1.0510.
ECB Weidmann: Tumbling Euro Good For Firms
The euro zone doesn't need any more monetary stimulus, ECB Governing Council member Jens Weidmann said on Thursday.
"I am skeptical of the need for more expansionary monetary policy," Weidmann said.
Shifting focus to the single currency, however, he welcomed the side-product of the bank's monetary easing, claiming that the depreciated euro will boost the economy in the bloc.
German comments
Turning to more domestic affairs, he announced that the German central bank - the Bundesbank - reported a smaller profit last year due to reduced interest income.
The bank's profit fell to €2.95 billion, steeply down from €4.59 billion a year earlier. The full amount was transferred to the Finance Ministry in Berlin on Thursday.
"Complacency in economic policy matters has no place in Germany," he claimed. "The unfavourable demographic outlook will weigh heavily on the German economy in the medium term," he warned.
At the same time, however, he said that the a 1.5% German growth projection for this year was ‘probably accurate’.
Greek comments
Turning to Greece, Weidmann said governments and parliaments must decide whether they were willing to further increase their exposure to Greece and cover the Greek state's financing needs.
"This is less of a task for the Eurosystem than it has ever been," he said. He said Greece has lost trust from its partners.
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Euro higher after U.S. data, recovering from heavy falls
The euro rebounded from 12-year lows against the dollar on Thursday after a week of steep declines and data showing an unexpected drop in U.S. retail sales gave the single currency an additional boost.
EUR/USD rose 0.92% to 1.0644, up from an overnight low of 1.0495, the weakest level since March 2003.
The euro rebounded against the dollar as the greenback took a breather from a rally sparked by the diverging monetary policy stance between the Federal Reserve and central banks in Europe and Japan.
The single currency had already weakened broadly this year after the European Central Bank unveiled a trillion-euro quantitative easing program in January.
The euro turned sharply lower after the bank started asset purchases on Monday, pushing euro area bond yields to new lows.
Lower bond yields make the single currency less attractive to investors at a time when expectations are mounting that the Federal Reserve could start rising interest rates mid-year.
The single currency received an additional boost after data showing an unexpected drop in U.S. retail sales in February tempered expectations for an early rate hike.
The Commerce Department reported that retail sales fell 0.6% in February, the third consecutive monthly decline. Economists had forecast in increase of 0.3%.
Core retail sales, which exclude automobiles, gasoline and food were flat following a 0.1% decline in January.
Another report showed that U.S. import prices rose 0.4% in February, snapping seven months of declines, but the report indicated that inflation pressures remained muted due to lower petroleum prices.
At the same time the Labor Department reported that the number people filing new claims for unemployment benefits fell by 36,000 to 289,000 last week, indicating that the recovery in the labor market is continuing to strengthen.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies was last at 99.16, 0.49% lower for the day. Earlier Thursday the index rose to 100.05, a level last reached in April 2003.
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price failed to break 1.0540 and rebounded to make a correction but still the downtrend is still valid.
German wholesale price index Feb mm +0.5% vs -0.4% prev
yy -2.1% vs -2.6% prev