EUR/USD – Limited Movement as Eurozone, German PMIs Soften

EUR/USD is stable on Thursday, as the pair trades in the low-1.25 range. On the release front, Eurozone PMI data disappointed, as Eurozone and German data weakened in November. On a bright note, French PMIs showed slight improvement. In the US, it’s a busy day, with four key indicators – Core CPI, CPI,Unemployment Claims and the Philly Fed Manufacturing Index. Any unexpected readings from these events could translate into some volatility from EUR/USD.

Eurozone and German PMIs softened in November, underscoring weakening activity in the manufacturing and services sectors. German Flash Manufacturing PMI dipped to 50.0 points, the separator between contraction and expansion. This marked the first month that the key indicator has failed to show expansion since June 2013. Eurozone Flash Manufacturing followed course, dipping to 50.4 points. This was the lowest reading recorded since June 2013.

The Federal Reserve released its minutes on Wednesday and there were no clues about the timing of a rate hike. The markets are expecting rates to rise in the second half of 2015, but this will of course depend on economic conditions. With inflation below the Fed target of 2%, there is less pressure to raise rates. The minutes also noted that that weak economic outlooks in Europe and Japan are unlikely to have a negative impact on the US economy.

The ECB hasn’t had much success in kick-starting the ailing Eurozone economy. Deep interest rate cuts haven’t boosted growth or inflation, so the ECB has reached deeper into its toolbox and  purchased covered bonds and asset-backed securities. So far, these purchases have been from the private sector, but the ECB could decide to expand these purchases to government bonds, known has quantitative easing (QE). However, there is strong resistance to QE from national central banks, such as the powerful German Bundesbank. Speaking before a European parliamentary committee on Monday, Draghi said that QE remains at option. If the ECB does decide to make such a move, the wobbly euro could lose more ground.

 

EUR/USD for Thursday, November 20, 2014

EUR/USD November 20 10:55 GMT

EUR/USD 1.2528 H: 1.2574 L: 1.2505

EUR/USD Technical

S1 S2 S1 R1 R2 R3
1.2286 1.2407 1.2518 1.2688 1.2806 1.2905

 

  • EUR/USD was flat in the Asian session. The pair has been choppy in the European session, testing support at 1.2518.
  • 1.2518 remains a weak support line. 1.2407 is stronger.
  • 1.2688 is a strong resistance line.
  • Current range: 1.2518 to 1.2688

Further levels in both directions:

  • Below: 1.2518, 1.2407, 1.2286, 1.2143 and 1.2042
  • Above: 1.2688, 1.2806, 1.2905 and 1.2995

 

OANDA’s Open Positions Ratio

EUR/USD ratio is unchanged on Thursday. This is consistent with EUR/USD, which has shown little net movement on the day. The ratio has been close to a split of short and long positions throughout the week, indicative of a lack of trader bias regarding EUR/USD.

 

EUR/USD Fundamentals

  • 7:00 German PPI. Estimate -0.1%. Actual -0.2%.
  • 8:00 French Flash Manufacturing PMI. Estimate 48.9 points. Actual 47.6 points.
  • 8:00 French Flash Services PMI. Estimate 48.6 points. Actual 48.8 points.
  • 8:30 German Flash Manufacturing PMI. Estimate 51.5 points. Actual 50.0 points.
  • 8:30 German Flash Services PMI. Estimate 54.5 points. Actual 52.1 points.
  • 9:00 Eurozone Flash Manufacturing PMI. Estimate 50.9 points. Actual 50.4 points.
  • 9:00 Eurozone Flash Services PMI. Estimate 52.3 points. Actual 51.3 points.
  • 12:45 US FOMC Member Daniel Tarullo Speaks.
  • 13:30 US CPI. Estimate -0.1%.
  • 13:30 US Core CPI. Estimate 0.2%.
  • 13:30 US Unemployment Claims. Estimate 286K.
  • 14:45 US Flash Manufacturing PMI. Estimate 56.2 points.
  • 15:00 Eurozone Consumer Confidence. Estimate -11 points.
  • 15:00 US Philly Fed Manufacturing Index. Estimate 18.9 points.
  • 15:00 US Existing Home Sales. Estimate 5.16M.
  • 15:00 US CB Leading Index. Estimate 0.6%.
  • 15:30 US Natural Gas Storage. Estimate -12B.
  • 18:30 US FOMC Member Loretta Mester Speaks.

*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.