Yesterday’s trade saw EUR/USD within the range of 1.0900-1.0991. The pair closed at 1.0926, falling 0.45% on a daily basis, while extending the loss from Monday. The daily high was a lower-high test of the high from December 28th.
At 7:16 GMT today EUR/USD was gaining 0.10% for the day to trade at 1.0934. The pair touched a daily high at 1.0936 at 7:08 GMT, overshooting the daily R1 level. Support may be received at the psychological 1.0900 level at first and after that – at the low from December 23rd (1.0869). Resistance may be encountered at the hourly 21-period EMA (1.0937) at first and then – in the area in proximity to the hourly 100-period EMA (1.0943).
Today EUR/USD trading may be influenced by the macroeconomic reports listed below.
Fundamentals
Euro area
Private Sector Lending
Lending to individuals and business entities in the Euro areas private sector probably expanded for a seventh consecutive month in November, rising at an annualized rate of 1.3%, according to market expectations. If so, this would be the fastest annual rate of increase in more than three years. In October the total value of private sector loans increased 1.2% year-on-year. In case lending expanded at a faster pace than anticipated, this would have a moderate bullish effect on the euro, as it implies higher economic activity in the future in terms of consumer spending and business investments. The European Central Bank (ECB) is expected to release the official data at 9:00 GMT.
United States
Pending Home Sales
The index of pending home sales in the United States probably rose for a second month in a row in November, going up at a monthly rate of 0.5%, according to the median estimate by experts. In October pending home sales rose 0.2%.
In annual terms, the index of pending home sales advanced 3.9% in October, which has been a 14th consecutive month of increase.
When a sales contract is accepted for a property, it is recorded as a pending home sale. As an indicator the index provides information on the number of future home sales, which are in the pipeline. It gathers data from real estate agents and brokers at the point of a sale and is currently the most accurate indicator regarding the US housing sector. It samples over 20% of the market. In addition, over 80% of pending house sales are converted to actual home sales within 2 or 3 months. Therefore, this index has a predictive value about actual home sales.
In case pending home sales increased at a faster pace than anticipated, this would have a moderate bullish effect on the US dollar. The National Association of Realtor’s (NAR) will report on the official index performance at 15:00 GMT.
Bond Yield Spread
The yield on German 2-year government bonds went as high as -0.325% on December 29th, or the highest level since December 16th (-0.317%), after which it closed at -0.330% to add 0.003 percentage point in comparison with December 28th. It has been the 8th gain in the past 21 trading days and also a second consecutive one.
The yield on US 2-year government bonds climbed as high as 1.103% on December 29th, or the highest level since April 2010, after which it closed at 1.095 to add 3.6 basis points (0.036 percentage point) compared to December 28th. It has been the 22nd gain in the past 31 trading days and also a fifth consecutive one.
The spread between 2-year US and 2-year German bond yields, which reflects the flow of funds in a short term, expanded to 1.425% on December 29th from 1.392% on December 28th. The December 29th yield spread has been the largest one in at least 8 months.
Meanwhile, the yield on German 10-year government bonds soared as high as 0.641% on December 29th, or the highest level since December 23rd (0.642%), after which it slid to 0.640% at the close to add 7.6 basis points (0.076 percentage point) compared to December 28th. It has been the 11th gain in the past 21 trading days.
The yield on US 10-year government bonds climbed as high as 2.319% on December 29th, or the highest level since December 16th (2.332%), after which it slipped to 2.300% at the close to add 6.8 basis points (0.068 percentage point) compared to December 28th. It has been the 12th gain in the past 31 trading days.
The spread between 10-year US and 10-year German bond yields shrank to 1.660% on December 29th from 1.668% on December 28th. The December 29th yield difference has been the lowest one since December 24th, when the spread was 1.620%.
Daily and Weekly Pivot Levels
By employing the Camarilla calculation method, the daily pivot levels for EUR/USD are presented as follows:
R1 – 1.0934
R2 – 1.0943
R3 (range resistance) – 1.0952
R4 (range breakout) – 1.0976
S1 – 1.0918
S2 – 1.0909
S3 (range support) – 1.0900
S4 (range breakout) – 1.0876
By using the traditional method of calculation, the weekly pivot levels for EUR/USD are presented as follows:
Central Pivot Point – 1.0937
R1 – 1.1028
R2 – 1.1079
R3 – 1.1170
S1 – 1.0886
S2 – 1.0795
S3 – 1.0744
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