EUR/USD – Steady as French Manufacturing Data Slips

EUR/USD continues to trade at high levels in Tuesday trading. The pair has hit six-week highs, as it trades in the mid-1.37 range in Tuesday’s European session. Eurozone releases have not looked good, as German releases were sluggish to start the week, and French Industrial Production posted a decline on Tuesday. Later in the day, ECB head Mario Draghi will deliver remarks in Rome at an event at the Bank of Italy. Over in the US, it’s another quiet day, highlighted by JOLTS Job Openings.

As the largest economy in the Eurozone, Germany’s economic releases are closely monitored by the markets. Monday’s numbers were sluggish, as the trade surplus shrunk to 16.8 billion euros, down from 18.8 billion in the previous release. This was well below the estimate of 17.4 billion. Industrial Production brought no relief, posting its third decline in four months. The November drop of 1.2% surprised the markets, which had expected a gain of 0.8%. The high-flying euro has shrugged off the weak numbers, as it remains above the 1.37 level.

US employment numbers continued to impress last week. After another strong Unemployment Claims release, Non-Farm Payrolls was almost unchanged, coming in at 203 thousand. This was well above the estimate of 180 thousand. The Unemployment Rate dropped from 7.3% to 7.0%, beating the estimate of 7.2%. The strong numbers are sure to increase the pressure on the Fed to taper QE when its meets later in December. The Fed has said that a stronger employment picture is a prerequisite to tapering QE, and last week’s numbers certainly increase the possibility of the Fed taking action at its December policy meeting.

As expected, the ECB stood pat last week and did not reduce interest rates, which remain at the record low of 0.25%. As well, the deposit rate remains at 0.0%. At a follow-up press conference, ECB head Mario Draghi said that the Bank would continue its accommodative policy stance and that interest rates would remain at current or lower levels for some time. He noted that there had been some discussion at the policy meeting about lowering the deposit rate. As for projected growth for the Eurozone, Draghi said that the ECB forecast for 2013 remains at -0.4%, with the 2014 prediction revised slightly higher, up to 1.1% growth from 1.0%.

EUR/USD for Tuesday, December 10, 2013

EUR/USD December 10 at 11:10 GMT

EUR/USD 1.3744 H: 1.3767 L: 1.3735

EUR/USD Technical

• EUR/USD continues to post gains in Tuesday trading. The pair touched a high of 1.3767 in the Asian session.
• On the downside, 1.3649 continues to provide support. This line has some breathing room as the pair trades at higher levels. This is followed by support at 1.3585.
• The pair continues to face resistance at 1.3786. This line has weakened and could face more pressure if the euro continues to gain ground. Next there is resistance line at 1.3893, which has remained intact since October 2011.
• Current range: 1.3649 to 1.3786

Further levels in both directions:

• Below: 1.3649, 1.3585, 1.3500, 1.3410 and 1.3325
• Above: 1.3786, 1.3893, 1.4000 and 1.4140

OANDA’s Open Positions Ratio

EUR/USD ratio is pointing to gains by long positions on Tuesday, continuing the trend we saw on the previous day. This is reflected in the pair, with the euro showing slight gains against the dollar. A large majority of the open positions remain short, indicative of a trader bias towards the dollar reversing directions and posting gains against the euro.

The pair has posted modest gains on Tuesday. With the US releasing more employment data during the day, we could see some movement from the pair in the North American session.

EUR/USD Fundamentals

• 7:45 French Industrial Production. Estimate 0.2%. Actual -0.3%.
• 9:00 Italian Industrial Production. Estimate 0.3%. Actual 0.5%.
• All Day – ECOFIN Meetings.
• 12:00 ECB President Mario Draghi Speaks.
• 12:30 US NFIB Small Business Index. Estimate 92.7 points.
• 15:00 US JOLTS Openings. Estimate 3.96M.
• 15:00 US Wholesale Inventories. Estimate 0.3%.

*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.