EUR/USD – Euro Downward Spiral Continues Ahead of US GDP, Jobs Data

The euro continues to lose ground on Wednesday, as EUR/USD trades below the 1.34 level in the European session. On the release front, it’s a busy day, with three key events out of the US – Advance GDP, ADP Nonfarm Payrolls and the Federal Reserve Policy Statement. In the Eurozone, Spanish GDP met expectations, posting a healthy 0.6% gain. However, Spanish CPI softened in June, with a 0.3% decline. Late in the day, Germany releases Preliminary CPI, a key indicator and market-mover.

The euro continues to head south, and has dipped below the 1.34 line for the first time since November. It’s been a July to forget for the euro, which has coughed up about 300 points to the surging US dollar. If Wednesday’s US employment and GDP figures are positive, the euro could lose more altitude.

CB Consumer Confidence was outstanding on Tuesday, pointing to a sharp increase in June. The key indicator jumped to 90.9 points, crushing the estimate of 85.5 points. This was the indicator’s highest level since September 2007. Consumer confidence is closely tracked by analysts since a confident consumer is likely to increase consumption, which is critical for economic growth.

In  the Eurozone, soft German data continues to concern the markets. German Import Prices posted a gain of 0.2%, which was the best showing in 2014. This was shy of the estimate of 0.3%. On Friday, German Ifo Business Climate, a key indicator, dipped to 108.0 points, its third straight decline. On the inflation front, Germany has not been immune to Eurozone inflation woes, and we’ll get a look at German Preliminary CPI later on Wednesday. The markets are expecting a weak gain of 0.2%.

 

EUR/USD for Wednesday, July 30, 2014

EUR/USD July 30 at 9:00 GMT

EUR/USD 1.3399 H: 1.3416 L: 1.3395

 

EUR/USD Technical

S3 S2 S1 R1 R2 R3
1.3175 1.3295 1.3346 1.3487 1.3585 1.3651

 

  • EUR/USD was flat in the Asian session. The pair is trading at the 1.34 line in European trading.
  • 1.3346 continues to provide support. 1.3295 is stronger.
  • On the upside, 1.3487 has some breathing room as the pair trades at lower levels.
  • Current range: 1.3346 to 1.3487

Further levels in both directions:

  • Below: 1.3346, 1.3295, 1.3175 and 1.3104
  • Above: 1.3487, 1.3585, 1.3651 and 1.3786

 

OANDA’s Open Positions Ratio

EUR/USD ratio is pointing to gains in short positions in Wednesday trade. This is consistent with pair’s movement, as the euro continues to lose ground. The ratio has a majority of long positions, indicative of trader bias towards the euro reversing direction and moving higher.

 

EUR/USD Fundamentals

  • All Day – German Preliminary CPI. Estimate 0.2%.
  • 7:00 Spanish Flash CPI. Estimate +0.2%. Actual -0.3%.
  • 7:00 Spanish Flash GDP. Estimate 0.5%. Actual 0.6%.
  • Tentative – Italian 10-year Bond Auction.
  • 12:15 US ADP Nonfarm Employment Change. Estimate 234K.
  • 12:30 US Advance GDP. Estimate 3.1%.
  • 12:30 US Advance GDP Price Index. Estimate 1.8%.
  • 14:30 US Crude Oil Inventories. Estimate -0.5M.
  • 18:00 US FOMC Policy Statement.
  • 18:00 US Federal Funds Rate. <0.25%.

*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.