EUR/USD – Euro Below 1.18 As Markets Eye US Jobs Data

EUR/USD remains under pressure on Tuesday, as the pair trades at the 1.18 line in the European session. The euro has suffered a miserable January, losing about 300 points against the surging US dollar. On the release front, German WPI dropped 0.1%, its third straight decline. Today’s major event in the US is JOLTS Job Openings, with the markets expecting a strong reading of 4.86 million.

What’s ailing the euro? The New Year hasn’t brought much cheer for the common currency, which has recorded sharp losses so far in 2015. EUR/USD is currently at its lowest level since November 2005. With the Eurozone showing little growth or inflation, efforts by the ECB, including cutting rates to almost zero haven’t had the desired effect, and a sluggish Eurozone economy has meant a softer euro. The ECB may be forced to play its trump card, quantitative easing. This would involve the purchase of large amounts of Eurozone bonds, and would likely push the euro down even further. The markets are on a “QE watch”, waiting to see what happens at the ECB’s next policy meeting next Thursday. On the weekend, the Italian central bank voiced its support for QE, noting that the Eurozone is at risk of deflation.

US releases wrapped up the week in fine fashion, as employment data shined. Nonfarm Employment Change, one of the most important indicators, posted a gain of 252 thousand, easily beating the estimate of 241 thousand. The unemployment rate fell to 5.6%, edging below the forecast of 5.7%. Meanwhile, Average Earnings dropped 0.2%, its first decline since July 2013. A lack of wage pressure means that the Fed may be able to postpone a rate hike until the second half of 2015.

EUR/USD for Tuesday, January 13, 2015

EUR/USD January 13 at 10:40 GMT

EUR/USD 1.1800 H: 1.1860 L: 1.1790

EUR/USD Technical

• EUR/USD showed limited movement in the Asian session. The pair has posted losses in the European session, breaking below resistance at 1.1802.
• 1.1802 has reverted to a resistance role and remains fluid. 1.1926 is stronger.
• 1.1734 is an immediate support level.
• Current range: 1.1734 to 1.1802

Further levels in both directions:

• Below: 1.1734, 1.1634, 1.1525 and 1.1426
• Above: 1.1802, 1.1926, 1.2042, 1.2143 and 1.2286

OANDA’s Open Positions Ratio

EUR/USD is pointing to gains in short positions on Tuesday, reversing the direction seen a day earlier. This is consistent with the pair’s movement, as the euro continues to post more losses. The ratio is evenly split between long and short open positions, indicative of a lack of trader bias towards where the pair is headed next.

EUR/USD Fundamentals

• 7:00 German WPI. Estimate +0.2%. Actual -1.0%.
• 9:00 Italian Industrial Production. Estimate 0.1%. Actual 0.3%.
• 12:30 US NFIB Small Business Index. Estimate 98.6 points.
• 15:00 US JOLTS Jobs Openings. Estimate 4.86M.
• 15:00 US IBD/TIPP Economic Optimism. Estimate 48.9 points.
• 18:01 US 10-year Bond Auction.
• 19:00 US Federal Budget Balance. Estimate 3.8B.

*Key releases are highlighted in bold

*All release times are GMT

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