EUR/USD – Stable as EU Presents Grim Forecast

EUR/USD is showing little movement on Tuesday, continuing the trend which started the week. In the European session, the pair is trading in the low-1.25 range in the European session. On the release front, the EU issued its economic forecasts, which project continuing weakness in the Eurozone. In Spain, Unemployment Change posted a dismal reading of 79.2 thousand. In the US, Trade Balance is expected to show little change, with an estimate standing at -$40.0 billion.

The EU released its Economic Forecasts on Tuesday, which provides an economic projection for Eurozone members for the next two years. EU Vice President Jyrki Katainen said that the economic and employment situation  is “not improving fast enough” in the zone, which continues to struggle with very weak growth and high unemployment. The EU noted that growth is expected to reach just 0.8%, growth this year, and heavyweights Germany and France are expected to post weak growth for 2014.

Last week’s German releases were mostly weak, as the Eurozone’s largest economy continues to struggle. On Friday, Retail Sales were dismal, plunging by 3.5%. This marked the sharpest decline since October 2007. The markets had expected a decline of 0.8%. Consumer Climate and CPI softened in September, although Unemployment Change was better than expected. The euro is sensitive to German data, and the struggling currency will have difficulty holding its own against the US dollar if German numbers don’t show improvement.

It was another solid performance from US GDP on Thursday, which posted a strong gain of 3.5% in Q3, higher than the estimate of 3.1%. Although this was short of the Q2 reading of 4.0%, the two readings mark the strongest six-month gain we’ve seen in 10 years. Unemployment Claims increased slightly to 287 thousand, slightly higher than the previous reading of 284 thousand. However, the four-week average remains at multi-year lows, pointing to an improving labor market.

EUR/USD for Tuesday, November 4, 2014

EUR/USD November 4 11:40 GMT

EUR/USD 1.2514 H: 1.2531 L: 1.2490

EUR/USD Technical

S1 S2 S1 R1 R2 R3
1.2143 1.2286 1.2407 1.2518 1.2688 1.2806

 

  • EUR/USD edged higher early in the Asian session, testing resistance at 1.2518. The pair is steady in the European session.
  • 1.2518 was tested earlier and remains fluid. We could see the pair break above this line during the day. 12.688 is a strong resistance line.
  • 1.2407 continues to provide strong support.
  • Current range: 1.2407 to 1.2518

Further levels in both directions:

  • Below: 1.2407, 1.2286, 1.2143 and 1.2042
  • Above: 1.2518, 1.2688, 1.2806, 1.2905 and 1.2984

 

OANDA’s Open Positions Ratio

EUR/USD ratio is almost unchanged on Tuesday. This is consistent with the limited movement we’re seeing from the pair. The ratio has a majority of long positions, indicative of trader bias towards the euro breaking out and moving higher.

 

EUR/USD Fundamentals

  • 8:00 Spanish Employment Change. Estimate 23.4 thousand. Actual 79.2 thousand.
  • 10:00 EU Economic Forecasts.
  • 10:00 Eurozone PPI. Estimate 0.0%. Actual 0.2%.
  • 13:30 US Trade Balance. Estimate -40.0B.
  • 15:00 US Factory Orders. Estimate -0.4%.
  • 15:00 US IBD/TIPP Economic Optimism. Estimate 46.6 points
  • All Day – US Congressional Elections.

*All release times are GMT

*Key releases are highlighted in bold.

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.