Monday, March 1st, 2010
EUR/USD: A Coming Rally or Retreat?
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The EUR/USD currency pair continued to trade within a range first defined in mid-February as it struggles to find direction amid conflicting reports in the U.S. and Europe. Prices bottomed out on Monday during the European session at around 1.3459 before rebounding to 1.3542 later during the U.S. trading session.
U.S. markets opened the week on a higher note as risk appetite has resumed, pressuring the dollar lower so far during the session. However, the dollar faces many key reports this week that could quickly shift its fortunes. The personal incomes report this morning indicated strong wages and salaries that jumped 0.4%, but not enough to offset a reversal in farm income in January.
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The spending side of the economy was also very mixed with a stronger-than-expected 0.5% jump in personal consumption. However, the results may have been bolstered by gasoline as spending on durable goods rose only 0.1% with spending on services only up a moderate 0.2%. Meanwhile, price readings were flat with core PCE up only 1.4%.
Another key indicator later in the week will be Wednesday’s ADP Employment Change survey as well as jobless claims on Thursday. The ADP report is expected to show a 10,000 job cut for February, which would mark the best result since January of 2008. Meanwhile, economists expect new jobless claims to reach 475,000 versus 496,000 a month ago.
On a technical level, the EUR/USD pair remains largely range-bound:
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-- Written by David Breen
