EUR/USD – Euro Sinks to 2-Year Lows, Dips Below 1.24

EUR/USD is stable on Friday, after losing over 100 points a day earlier. The euro has slipped below the 1.24 line and has hit its lowest level since August 2012. Will the downward slide continue? It very well could if US job numbers impress on Friday. We’ll get a look at Nonfarm Employment Change and the Unemployment Rate. The markets are expecting solid figures from both key releases. Later in the day, Fed Chair Janet Yellen will speak at an event in Paris, France. In the Eurozone, German Industrial Production posted a gain of 1.4%, well below expectations. French Industrial Production remained at 0.0%.

Mario Draghi and his ECB colleagues haven’t had much to cheer about lately, with the Eurozone mired in low growth, weak inflation and high unemployment. Draghi has lowered interest rates to the bone, but the cuts have not improved the economic situation. The ECB has decided to focus on its balance sheet and has issued long-term loans to banks and purchased covered bonds. The ECB will begin buying asset-backed purchases later this month, so we could see the wobbly euro lose more ground. However, these moves may not be enough and Draghi may be forced to borrow a page from the book of other central banks and commence QE, which is the purchase of government securities.

With the US recovery continuing to deepen, employment numbers continue to improve. This trend was underscored on Thursday, as Unemployment Claims fell to 278 thousand. This was better than the estimate of 285 thousand and marked a three-week low. This strong figure comes on the heels of the ADP Nonfarm Payrolls report, which climbed to 230 thousand, its strongest showing in 2014. The week wraps up with the official Nonfarm Payrolls release on Friday. The markets are expecting a downturn, with the estimate standing at 229 thousand. Will the key indicator surprise the markets and beat the forecast? Nonfarm Payrolls is one of the most important indicators, so traders should be prepared for some movement from USD/CAD following its release.

EUR/USD for Friday, November 7, 2014

EUR/USD November 7  9:10 GMT

EUR/USD 1.2394 H: 1.2402 L: 1.2368

EUR/USD Technical

• EUR/USD was flat in the Asian session and has edged higher in European trade.
• 1.2407 has reverted to a resistance role after strong losses by EUR/USD on Thursday. It remains a weak line. 1.2518 is stronger.
• 1.2286 is providing strong support.
• Current range: 1.2286 to 1.2407

Further levels in both directions:

• Below: 1.2286, 1.2143, 1.2042 and 1.1875
• Above: 1.2407, 1.2518, 1.2688, 1.2806 and 1.2905

OANDA’s Open Positions Ratio

EUR/USD ratio is pointing to gains in long positions in Friday. This is consistent with the pair’s movement, as the euro has post small gains. The ratio has a majority of long positions, indicative of trader bias towards the euro breaking out of range and moving higher.

EUR/USD Fundamentals

• 00:05 US FOMC Member Loretta Mester Speaks.
• 7:00 German Industrial Production. Estimate 2.1%. Actual 1.4%.
• 7:00 German Trade Balance. Estimate 18.3B Actual 18.5B.
• 7:45 French Industrial Production. Estimate -01.% Actual 0.0%.
• 7:45 French Government Budget Balance. Actual -80.5B.
• 7:45 French Trade Balance. Estimate -5.2B. Actual -4.7B.
• All Day – ECOFIN Meetings.
• 13:30 US Nonfarm Employment Change. Estimate 235K.
• 13:30 US Unemployment Rate. Estimate 5.9%.
• 13:30 US Average Hourly Earnings. Estimate 0.2%.
• 15:15 US Fed Chair Janet Yellen Speaks.
• 19:00 US Consumer Credit. Estimate 16.6B.
• 19:30 US FOMC Member Daniel Tarullo Speaks.

*Key releases are highlighted in bold.

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