EUR/USD – Euro Weakens on Soft German, Euro Economic Sentiment

EUR/USD has lost ground on Tuesday, as the pair trades in the mid-1.33 range. On the release front, the German and Euro confidence indicators slid last month and were well below expectations. German ZEW Economic Sentiment slipped to 8.6 points, while the Eurozone ZEW Economic Sentiment dropped to 23.7 points. In the US, today’s key event is JOLTS Job Openings, an important employment indicator.

German ZEW Economic Sentiment, a key release, took a tumble in July, falling to just 8.6 points, down from 27.1 points a month earlier, and its lowest level since November 2012. The estimate stood at 18.2 points. This is the latest figure in a string of weak German releases. Last week, the trade surplus narrowed and manufacturing numbers missed expectations. With economic indicators pointing downward and confidence in the German economy ebbing, we could see a decline in German GDP in the second quarter, which would likely have a chilling effect on the shaky euro. Eurozone ZEW Economic Sentiment followed suit, slipping to 23.7 points, compared to 48.1 points in the previous release. The markets had expected a reading of 41.3 points.

In the US, employment indicators are under the market microscope, as the strength of the labor market is one of the most important factors influencing the Federal Reserve regarding the timing of an interest rate hike. A rate hike is expected by mid-2015, but stronger economic data, especially on the employment front, could hasten a rate move. We’ll get a look at JOLTS Jobs Openings later on Tuesday. The indicator has been on an upswing and exceeded the estimate in the past two releases. Another rise is expected in the July release, with the estimate standing at 4.74 million.

EUR/USD for Tuesday, August 12, 2014

EUR/USD August 12 at 9:30 GMT

EUR/USD 1.3342 H: 1.3383 L: 1.3343

EUR/USD Technical

• EUR/USD showed little movement in the Asian session. The pair has edged lower in the European session as the euro remains under pressure.
• 1.3295 is an immediate support line. 1.3175 is next.
• 1.3346 has reverted to a resistance line as the euro has weakened. This line is fluid and could see further action during the day. 1.3487 is stronger.
• Current range: 1.3295 to 1.3346

Further levels in both directions:

• Below: 1.3295, 1.3175, 1.3104 and 1.2966
• Above: 1.3346, 1.3487, 1.3585 and 1.3651

OANDA’s Open Positions Ratio

EUR/USD ratio is pointing to gains in long positions in Tuesday trade, reversing the direction seen a day earlier. This is not consistent with the pair’s movement, as the euro has posted losses. The ratio has a majority of long positions, indicative of trader bias towards the euro reversing course and moving to higher ground.

EUR/USD Fundamentals

• 9:00 German ZEW Economic Sentiment. Estimate 18.2 points. Actual 8.6 points.
• 9:00 Eurozone ZEW Economic Sentiment. Estimate 41.3 points. Actual 23.7 points.
• 11:30 US NFIB Small Business Index. Estimate 96.3 points.
• 14:00 US JOLTS Job Openings. Estimate 4.74M.
• 18:00 US Federal Budget Balance. Estimate -98.2B.

*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.