EUR/USD – Euro Lower After Sharp US Employment Numbers

 EUR/USD has lost ground in the Friday session, as the pair has dropped to the mid-1.30 range. The euro pointed downwards as US Employment Claims was way below expectations. Looking at Friday’s releases, German WPI was well below the estimate, and Eurozone Industrial Production rebounded from last month’s decline of -04%, posting a gain of 0.4%. This edged past the estimate of 0.3%. Also, both the Eurogroup and ECOFIN are holding meetings today. After a quiet week out in the US, there are a host of events on Friday, including four key releases –  Core Retail Sales, Retail Sales, PPI and UoM Consumer Sentiment. In addition, Fed Chairman Bernanke will deliver remarks at a conference in Washington.

After two straight weeks of dismal releases, the US finally broke out of the slump on Thursday. Unemployment Claims rebounded nicely, dropping from 385 thousand new claims to just 346 thousand. This easily beat the estimate of 354 thousand. The bad US numbers came from a wide section of the economy, and the markets are hoping that the worst is behind us. Friday should provide a good test, as the US posts four major releases. Strong numbers will boost markets sentiment, but additional figures off the mark are sure to raise red flags about the extent of the recovery.

The Federal Open Market Committee released its meeting minutes on Wednesday, and the most exciting thing about the release was that it was leaked several hours ahead of schedule. The Federal Reserve was not amused, and has ordered an investigation into the matter. The minutes themselves turned out to be a non-event, with policymakers divided as to the extent and duration of the current round of QE. Some members wanted to wind down the program in the middle of 2013, while others felt it was more appropriate to wait until the end of the year. There was also discussion about whether to decrease the amount of asset purchases immediately, or continue the present levels until the end of the year. The division in opinion reflects uncertainty over the extent of the US recovery and the health of the economy. With the US reeling off a host of poor releases throughout April, FOMC members might have had a different take on the QE program had the meeting taken place in April rather than March.

Back in Europe, the Eurogroup finance ministers will be gathering in Dublin on Friday. Although the Cyprus bailout has been in the headlines in recent weeks, other Eurozone members have received bailouts and their repayment of loans must be monitored. These include Ireland and Portugal, and the Eurogroup will be discussing whether these two countries should  be granted an extension on their loan repayments. The Cyprus bailout will also be on the agenda. The latest development is that the Cyprus government has confirmed that the cost of the bailout has ballooned to EUR 23 billion.

EUR/USD for Friday, April 12, 2013

1.3048 H: 1.3127 L: 1.3040

EUR/USD Technical

EUR/USD has lost ground in Friday’s European session. The pair is receiving support at 1.3030. This is a weak line, and could be breached if the euro continues to fall. There is a stronger support level at 1.2960. On the upside, the pair is facing resistance at the round number of 1.31. This is followed by a resistance line at 1.3170.

• Current range: 1.3030 to 1.31.

Further levels in both directions:

• Below: 1.3030, 1.30, 1.2960, 1.2835 and 1.2805
• Above: 1.31, 1.3170, 1.3240, 1.3350, 1.34

OANDA’s Open Position Ratios

After no movement on Thursday, the EUR/USD ratio is showing movement in the direction of short positions. This is consistent with what we are seeing from the pair, as the euro has lost ground against the US dollar. Short positions comprise a substantial majority of the open positions, indicative of a bias in trader sentiment towards the euro continuing to point downwards.

The US dollar has posted gains against the euro following an excellent employment release. With the US releases four major events on Friday, we could see some volatility from the pair before the end of trading week.

EUR/USD Fundamentals

• 6:00 German WPI. Exp. 0.3%. Actual -0.2%.
• 9:00 Eurozone Industrial Protection. Exp. 0.3%. Actual 0.4%.
• All Day: ECOFIN Meetings.
• All Day Eurogroup Meetings.
• 12:30 US Core Retail Sales. Exp. -0.1%.
• 12:30 US PPI. Exp. -0.2%.
• 12:30 US Retail Sales. Exp. 0.0%.
• 12:30 US Core PPI. Exp. 0.2%.
• 12:45 US FOMC Member Eric Rosengren Speaks.
• 13:55 US Preliminary UoM Consumer Sentiment. Exp. 79.1 points.
• 13:55 US Preliminary UoM Inflation Expectations.
• 14:00 US Business Inventories. Exp. 0.4%.
• 16:30 Fed Chairman Bernard Bernanke Speaks.

*Key releases are highlighted in bold

*All release times are GMT

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.