EUR/USD – Strong Euro Shrugs Off Weak Manufacturing Data

EUR/USD is steady in Wednesday trade, as the pair shows little movement for the second straight day. In the European session, the euro is trading in the mid-1.38 range. Eurozone Industrial Production declined in February but the euro did not react. In the US, JOLTS Job Openings dipped to a three-month low and fell short of the estimate. It’s a quiet day in the US, with no major releases. Today’s highlight is Crude Oil Inventories.

Tuesday’s employment numbers could have been better, as JOLTS Job Openings dipped to 3.97 million in February. This fell short of the estimate of 4.02 million and marked a three-month low. On Friday, Nonfarm Payrolls jumped to 175 thousand in February, compared to just 113 thousand last month. This easily beat the estimate of 151 thousand. The Unemployment Rate edged up to 6.7%, up from 6.6% in the previous reading. With the markets expecting the Fed to trim QE next week, every employment release should be treated as a market-mover.

With the US posting solid Unemployment Claims and Nonfarm Payrolls late last week, the markets can breathe more comfortably as the Fed is likely to take its scissors and trim QE next week for the third time. New York Fed President William Dudley stated last week that the threshold to alter the Fed’s program to wind up QE was “pretty high”. In other words, short of a serious economic downturn in the US economy, we can expect the QE tapers to continue.

After last week’s ECB rate, Mario Draghi sounded optimistic, saying that the Eurozone was showing modest recovery. That assertion is certainly questionable if we take Germany out of the equation, as major economies like France and Italy continue to struggle. German releases have looked good recently, but Trade Balance weakened in February, and additional weak numbers out of the Eurozone’s largest economy could spell trouble for the euro.

French releases continue to struggle, as Industrial Production fell by 0.2% last month, its fourth decline in five readings. The markets had expected a gain of 0.6%. Trade Balance lost ground in February and the most recent Consumer Spending posted a sharp decline, pointing to weak consumer confidence in the economy. France is the Eurozone’s second largest economy after Germany, and continuing weak French data could hurt the euro.

EUR/USD for Wednesday, March 12, 2014

EUR/USD March 12 at 12:10 GMT

EUR/USD 1.3872 H: 1.3875 L: 1.3843

EUR/USD Technical

• EUR/USD is showing little movement in Wednesday trade. The pair touched a low of 1.3843 late in the Asian session.
• 1.3893 is providing resistance. This is a weak line which could face pressure during the day. The key psychological line of 1.40 follows.
• 1.3786 is providing support. The next support level is 1.3649.
• Current range: 1.3786 to 1.3893

Further levels in both directions:

• Below: 1.3786, 1.3649, 1.3585, 1.3410 and 1.3347
• Above: 1.3893, 1.4000, 1.4149 and 1.4307

OANDA’s Open Positions Ratio

EUR/USD ratio is pointing to gains in long positions, continuing the trend we saw on Tuesday. This is consistent with the pair’s current movement, as the euro has posted very slight gains. Short positions retain a strong majority, indicative of trader bias towards the dollar posting gains.

The euro continues to trade at high levels. It has edged higher in the European session.

EUR/USD Fundamentals

• 6:30 French Final Nonfarm Payrolls. Estimate 0.1%. Actual 0.1%.
• 10:00 Eurozone Industrial Production. Estimate 0.6%. Actual -0.2%.
• 14:30 US Crude Oil Inventories. Estima 2.1M.
• 17:01 US 10-year Bond Auction.
• 18:00 US Treasury Secretary Jack Lew 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.