EUR/USD – Slightly Lower As Eurozone Trade Surplus Misses Target

EUR/USD has edged lower in Wednesday trading, as the euro trades in the low-1.36 range in the European session. The losses have erased most of the gains that we saw at the start of the week. Eurozone Trade Balance improved to 16.0 billion euros in December, but this was short of the estimate of 16.7 billion. Over in the US, today’s key event is Core PPI. As well, we’ll get a look at the Empire State Manufacturing Index. On Tuesday, US retail numbers were a mix, as Core Retail Sales beat the estimate while Retail Sales weakened.

There was good news out of the Eurozone on Tuesday as Industrial Production looked sharp. The key manufacturing indicator bounced back from a decline of 1.1% in November, posting an excellent gain of 1.8% in December, a multi-year high. This beat the estimate of 1.6%. Meanwhile, the first ECB rate announcement of 2014 was a non-event last week, as the central bank held the benchmark rate at a record low of 0.25%, as expected. ECB president Mario Draghi said that monetary policy will remain accommodative for as long as is needed to help the Eurozone economy recover, and that interest rates will likely remain at present or lower levels for the foreseeable future. If growth and inflation indicators continue to look weak, the ECB may have to take action at its next meeting in February.

Last week’s disappointing Non-Farm Payrolls report may have created some concern in the markets, but is unlikely to change the Federal Reserve’s path of tapering QE, which it started just this month. In December, outgoing Fed chair Bernard Bernanke strong hinted that the Fed planned to wind up QE by the end of 2014, reducing the asset-purchase program by increments of $10 billion at each Fed policy meeting. The Fed will hold its next policy meeting on January 28, and the question is will the Fed reduce QE by another $10 billion, down to $65 billion each month. Most analysts feel that one bad employment report will not affect the taper schedule and the Fed will continue to scale down QE at the next meeting.

 

EUR/USD for Wednesday, January 15, 2014

Forex Rate Graph 21/1/13

EUR/USD January 15 at 11:10 GMT

EUR/USD 1.3630 H: 1.3643 L: 1.3608

 

EUR/USD Technical

S3 S2 S1 R1 R2 R3
1.3410 1.3500 1.3585 1.3649 1.3786 1.3893

 

  • EUR/USD has moved lower in Wednesday trading. The pair dropped to a low of 1.3608 early in the European session.
  • 1.3649 has reverted to a resistance line. It is a weak line which could be tested during the day. This is followed by a stronger resistance line at 1.3649.
  • The pair is receiving support at 1.3585. The next support line is at the round number of 1.3500.
  • Current range: 1.3585 to 1.3649

Further levels in both directions:

  • Below: 1.3585, 1.3500, 1.3410 and 1.336
  • Above: 1.3649, 1.3786, 1.3893, 1.4000 and 1.4140

 

OANDA’s Open Positions Ratio

EUR/USD ratio has reversed positions and is pointing to gains in long positions in Wednesday trading. This is consistent with what we are seeing from the pair, as the euro has lost ground against the dollar. The ratio is made up largely of short positions, indicative of a trader bias towards the dollar continuing to move to higher levels.

The euro is steady has lost ground in Wednesday trading and is slightly above the 1.36 line. With the US releasing key inflation data later in the day, we could see some strong movement later in the North American session.

 

EUR/USD Fundamentals

  • 10:00 Eurozone Trade Balance. Estimate 16.7B. Actual 16.0B.
  • 13:30 US PPI. Estimate 0.5%.
  • 13:30 US Core PPI. Estimate 0.1%.
  • 13:30 US Empire State Manufacturing Index. Estimate 3.2 points.
  • 15:30 US Crude Oil Inventories. Estimate -0.7M.
  • 19:00 US Beige Book.

 

*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.

Kenny Fisher

Kenny Fisher

Currency Analyst at Market Pulse
Kenny Fisher joined OANDA in 2012 as a Currency Analyst. Kenny writes a daily column about current economic and political developments affecting the major currency pairs, with a focus on fundamental analysis. Kenny began his career in forex at Bendix Foreign Exchange in Toronto, where he worked as a Corporate Account Manager for over seven years.