EUR/USD: Steady Ahead of ECB, US Payrolls

EUR/USD is showing little movement on Thursday, as the pair trades in the mid-1.36 range in the European session. It’s a busy day on the release front, and traders can expect some movement from EUR/USD during the day. In the Eurozone, Eurozone and Spanish Services PMI softened, while Italian Services PMI improved. Eurozone Retail Sales dropped to a flat 0.0%, its worst showing in five months. Later in the day, the ECB will announce its benchmark interest rate, followed by a press conference hosted by ECB head Mario Draghi. In the US, employment data is in the spotlight, with the releases of Nonfarm Payrolls, the Unemployment Rate and Unemployment Claims. As well, the US will release Trade Balance.

Will the ECB take any dramatic action at its policy meeting later on Thursday? Most analysts are saying no, with the ECB expected to hold rates at the record low of 0.15% and maintain current monetary policy. At the June meeting, the ECB took unprecedented steps to combat low growth and inflation, including negative deposit rates. These measures were intended to boost inflation and growth levels, but that hasn’t occurred, at least not yet. This was reaffirmed with the release of Eurozone Retail Sales on Thursday, the primary gauge of consumer spending. The indicator dipped to 0.0%, shy of the estimate of 0.3%.

Weak German data continues to be a source of concern. The week started with Retail Sales, the primary gauge of consumer spending, posting its third straight decline. The indicator came in at -0.6% last month, well off the forecast of +0.8%. Unemployment Change, which had posted strong declines in the first quarter of the year, has reversed direction and recorded two straight gains, pointing to trouble in the employment sector. In June, the indicator came in at +9K, compared to an estimate of -9K. The euro is sensitive to German data, as Germany is the largest economy in the Eurozone.

In the US, ADP Nonfarm Payrolls was outstanding, soaring to 281 thousand, up from 179 thousand a month earlier. This crushed the estimate of 207 thousand. Will the official Nonfarm Payrolls follow suit? The markets are expecting a reading of 214 thousand, slightly below the May reading. The Unemployment Rate and Unemployment Claims are also expected to show little change. If there are any surprises from these key indicators, traders can expect some movement from EUR/USD during the day.

 

EUR/USD for Thursday, July 3, 2014

EUR/USD July 3 at 9:50 GMT

EUR/USD 1.3654 H: 1.3664 L: 1.3645

 

EUR/USD Technical

S3 S2 S1 R1 R2 R3
1.3487 1.3585 1.3651 1.3786 1.3893 1.4000

 

  • EUR/USD has been very quiet in the Asian and European sessions.
  • On the downside, the pair is testing support at 1.3651. Will this line fall? 1.3585 follows.
  • 1.3786 is a strong resistance line.
  • Current range: 1.3651 to 1.3786

Further levels in both directions:

  • Below: 1.3651, 1.3585, 1.3487 and 1.3346
  • Above: 1.3786, 1.3893, 1.40, 1.4172

 

OANDA’s Open Positions Ratio

EUR/USD ratio is pointing to gains in long positions on Thursday. This is consistent with the movement of the pair, as the euro has posted very small gains. The ratio is showing a majority of short positions, indicative of a trader bias to the US dollar breaking out and moving higher against the euro.

 

EUR/USD Fundamentals

  • 7:15 Spanish Services PMI. Estimate 56.3 points. Actual 54.8 points.
  • 7:45 Italian Services PMI. Estimate 52.3 points. Actual 53.9 points.
  • 8:00 Eurozone Final Services PMI. Estimate 52.8 points. Actual 52.8 points.
  • 9:00 Eurozone Retail Sales. Estimate 0.3%. Actual 0.0%.
  • 9:01: French 10-year Bond Auction. Actual 1.77%.
  • 11:30 US Challenger Job Cuts.
  • 11:45 Eurozone Minimum Bid Rate. Estimate 0.15%.
  • 12:30 ECB Press Conference.
  • 12:30 US Nonfarm Employment Change. Estimate 214K.
  • 12:30 US Unemployment Claims. Estimate 314K.
  • 12:30 US Unemployment Rate. Estimate 6.3%.
  • 12:30 US Trade Balance. Estimate -45.1B.
  • 12:30 US Average Hourly Earnings. Estimate 0.2%.
  • 13:45 US Final Services PMI. Estimate 61.1 points.
  • 14:00 US ISM Non-Manufacturing PMI. Estimate 56.2 points.
  • 14:30 US Natural Gas Storage. Estimate 100B.

*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.