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FOREX Watch: EUR/USD braces for heavy week

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FOREX Watch: EUR/USD braces for heavy week

The EURUSD found itself on the downside Monday as investors braced for an active week of data releases headlined by the United States and Germany. The pair declined more than a quarter percent throughout the day, extending losses from the European session. The pair reached a session low of 1.3277 before consolidating at 1.3299 at the end of North American session. The trend index points to a slightly bearish market for EUR/USD, with key supports situated at 1.3274 and 1.3241. On the upside, the next resistance bands are found at 133.67 and 1.3400.

Germany makes headlines Tuesday with the release of its Consumer Price Index, a key measure of inflation. The inflation report will be accompanied by the ZEW Survey on Economic Sentiment, which is expected to influence heavily the direction of euro pairs. The North American session will also make headlines with the release of US retail sales. From then on investors can expect a heavy dose of data, including Wednesday’s GDP reports from Germany and the Eurozone, followed by CPI and jobs reports from the US on Thursday.

Losses for EURUSD were accentuated Monday on Greece sovereign debt woes. According to Germany’s Der Spiegel, the Bundesbank believes Greece will require another bailout by 2014. This would come several months after Germany’s September 22nd general elections. Angela Merkel’s conservative government has struggled to remain firm on the Greece bailout controversy. The prospect of another bailout will likely create backlash from an already disgruntled German population.

Although sovereign debt crises, political controversy and economic retraction continue to plague the Eurozone, the euro remains one of the developed world’s most successful currencies. However, signs the single currency may be falling out of favour are emerging. The EURUSD is trading on a gain of 1.07 percent year-to-date. The introduction of bond tapering by the US Federal Reserve has the potential to make this trade a loser before the end of the year. Thursday’s CPI and jobs reports will play a key part in the market’s speculation over Fed interest rates and monetary stimulus.

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