EUR/USD is stable on Tuesday, as the pair trades slightly above the 1.24 line in the European session. On the release front, there are no releases out of the Eurozone, and French banks are closed for Remembrance Day. In the US, banks will be closed for Veterans Day, so traders can expect reduced liquidity in the currency markets. The only release on Tuesday is NFIB Small Business Index, a minor event.
It was a poor start for the Eurozone on Monday. Italian Industrial Production dropped 0.9%, its third decline in three releases. The markets had expected a gain of 0.2%. There was no relief from Eurozone Sentix Investor Confidence, which posted a third straight decline, as investor and analyst sentiment has slipped to very low levels. This poor reading comes as no surprise, as with the Eurozone stuck with 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, which could push down on the struggling euro. 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 quantitative easing, which is the purchase of government securities.
Employment numbers have been strong in the US, and this played a major role in the Fed decision to wind up QE last week. However, US Nonfarm Payrolls, the most important employment indicator, disappointed on Friday. The indicator slipped to 214 thousand, well short of the estimate of 235 thousand. On a brighter note, the unemployment rate slipped to 5.8%, its lowest level in six years. On Thursday, Unemployment Claims fell to 278 thousand. This was better than the estimate of 285 thousand and marked a three-week low.
EUR/USD for Tuesday, November 11, 2014
EUR/USD November 11 11:25 GMT
EUR/USD 1.2421 H: 1.2441 L: 1.2394
- EUR/USD has been uneventful in the Asian session. The pair tested support at 1.2407 in European trade.
- 1.2407 was tested earlier but continues to provide support. 1.2286 is stronger.
- 1.2518 is a strong resistance line.
- Current range: 1.2407 to 1.2518
Further levels in both directions:
- Below: 1.2407, 1.2286, 1.2143, 1.2042 and 1.1875
- Above: 1.2518, 1.2688, 1.2806 and 1.2905
OANDA’s Open Positions Ratio
EUR/USD ratio is pointing to gains in long positions on Tuesday, reversing the direction seen a day earlier. This is not consistent with the pair’s movement, as the euro is almost unchanged on the day. The ratio is close to a split between and short positions, indicative of a lack of trader bias towards what direction to expect from EUR/USD.
- 12:30 US NFIB Small Business Index. Estimate 95.1 points.
*Key releases are highlighted in bold.