EUR/USD – Slow and Steady as US Markets off for Holiday

The week has kicked off on a quiet note, as there are no European releases to start off the week and the US markets are closed for Columbus Day. EUR/USD is trading quietly on Monday, and we’re unlikely to see much movement during the day. In the European session, EUR/USD is trading just below the 1.14 level. Three FOMC members will speak during the day. Traders should keep an eye on two key events on Tuesday – the German and Eurozone Economic Sentiment reports.

Will the Federal Reserve press the trigger and raise rates in 2015? The markets had circled September as a likely candidate for a rate hike, but the Federal Reserve remained on the sidelines yet again. The Fed released the minutes of its September policy meeting last week, and  indicated that the Fed does not feel that the timing is appropriate for a rate hike, but provided few clues as to when the Fed might take action. Policymakers cited concerns that the sluggish global economy could affect the US economy. With global economic conditions unlikely to change anytime soon, a rate move may be on hold unless the US posts some key releases which match or beat expectations. FOMC member Dennis Lockhart sounded somewhat optimistic about a rate hike in October or December, but noted that the domestic economy, especially consumer indicators, would have to be strong in order for the Fed to raise rates. Lockhart and two other FOMC members will be speaking on Monday, and the markets will be paying close attention.

Meanwhile, the ECB summary was cautious in tone, sounding much like the Fed minutes. The Eurozone is stuck with low growth and weak inflation, but the summary indicated that there are no plans to expand the current stimulus program, at least for now. Germany, the Eurozone’s largest economy, posted disappointing manufacturing and trade balance numbers in August. These weak numbers underscore growing concern that the global slowdown is affecting Germany, and investors are nervous that a contraction in the German economy could quickly affect the rest of the bloc and send the fragile Eurozone economy into a tailspin.

EUR/USD Fundamentals

Monday (Oct. 12)

  • 12:10 Fed FOMC Member Denis Lockhart Speaks.
  • 14:30 Fed FOMC Member Charles Evans Speaks.
  • 20:30 Fed FOMC Member Lael Brainard Speaks.

The markets will be listening closely to remarks from these FOMC members, following the release of the Federal Reserve’s minutes. Any hints about a rate hike could bolster the US dollar.

Upcoming Key Events

Tuesday (Oct. 13)

  • 9:00 German ZEW Economic Sentiment. Estimate 6.8 points.
  • 9:00 Eurozone ZEW Economic Sentiment. Estimate 30.1 points.

Both indicators recorded sharp drops in September, and the markets are expecting the downward trend to continue in October. If these key indicators fail to meet their estimates, we could see EUR/USD respond with losses.

*Key releases are highlighted in bold

*All release times are GMT

EUR/USD for Monday, October 12, 2015

EUR/USD October 12 at 9:50 GMT

EUR/USD 1.1393 H: 1.1397 L: 1.1360

EUR/USD Technical

S1 S2 S1 R1 R2 R3
1.1105 1.1214 1.1296 1.1392 1.1470 1.1658
  • EUR/USD has shown little movement in the Asian and European sessions.
  • 1.1296 has strengthened in support following gains by the euro last week.
  • 1.1392 is a weak resistance line and could be tested during the day.
  • Current range: 1.1296 to 1.1392

Further levels in both directions:

  • Below: 1.1296, 1.1214, 1.1105, 1.1017 and 1.0928
  • Above: 1.1392, 1.1470, 1.1658 and 1.1712

OANDA’s Open Positions Ratio

EUR/USD ratio is showing no movement on Monday, as short positions continue to retain a majority of the open positions (56%). This is consistent with the lack of movement we are seeing from the pair.  The majority of short positions points to slight trader sentiment in favor of the euro losing ground against the dollar.

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.