EUR/USD – Euro Slipping Ahead of Key ECB Meeting

EUR/USD has weakened on Thursday, as the pair trades at 1.0560 in the European session. There are a host of European and US releases on the schedule. In the Eurozone, the key event is the ECB policy meeting, with the markets expecting a move by the central bank. Eurozone Services PMIs and Retail Sales met expectations. Over in the US, today’s key events are Unemployment Claims and the ISM Non-Manufacturing PMI. As well, Federal Reserve Chair Janet Yellen testifies before the Joint Economic Committee.

The Eurozone economy is in deep trouble, beset by inflation, high unemployment and weak growth. Germany, the bloc’s largest economy, although in better shape than the rest of the bloc, has also been affected by the malaise which has hit the continent as well as the global slowdown. This means that the markets are expecting the ECB to make a move at its policy meeting on Thursday. Possible scenarios include lowering the deposit rate below the current -0.20% or expanding the current QE asset program by 15-20 billion euros. Either of these steps will likely weigh on the struggling euro, which is trading at its lowest levels since April and could be headed closer towards parity. There is also talk of some structural changes, as the central bank considers implementing two-tier negative rates on deposits to protect the banking sector profitability.

In the US, this week’s employment numbers kicked off in style, with a strong surge from ADP Nonfarm Payrolls. The key indicator climbed to 217 thousand, easily beating the estimate of 191 thousand. This marked a sharp rebound from the previous release of 182 thousand. On Thursday, we’ll get a look at Unemployment Claims, with the markets expecting the indicator to rise to 269 thousand. The employment event parade concludes on Friday, with the official Nonfarm Payrolls report. The markets are braced for a strong downturn, with an estimate of 201 thousand. With the markets abuzz over continuing speculation about a rate hike later in the month, these employment releases will be under the market microscope and could result in volatility on the currency markets.

EUR/USD Fundamentals

Thursday (Dec. 3)

• 8:15 Spanish Services PMI. Estimate 56.2 points. 56.7 points
• 8:45 Italian Services PMI. Estimate 53.9 points. 53.4 points
• 8:50 French Final Services PMI. Estimate 51.3 points. Actual 51.0 points
• 8:55 German Final Services PMI. Estimate 55.6 points. Actual 55.6 points
• 9:00 Eurozone Final Services PMI. Estimate 54.6 points. Actual 54.2 points
• 9:56 Spanish 10-year Bond Auction. Actual 1.46%
• 10:00 French 10-year Bond Auction. Actual 0.50%
• 10:00 Eurozone Retail Sales. Estimate 0.2%. Actual -0.1%
• 12:30 US Challenger Job Cuts
• 12:45 ECB Minimum Bid Rate. Estimate 0.05%
• 13:30 ECB Press Conference
• 13:30 US Unemployment Claims. Estimate 269K
• 14:45 US Final Services PMI. Estimate 56.5 points
• 15:00 Fed Chair Janet Yellen Testifies
• 15:00 US ISM Non-Manufacturing PMI. Estimate 58.1 points
• 15:00 US Factory Orders. Estimate 1.2% 
• 15:30 US Natural Gas Storage. Estimate -22B
• 18:10 US FOMC Member Stanley Fischer Speaks

Upcoming Key Events

Friday (Dec. 4)

• 13:30 US Average Hourly Earnings. Estimate 0.2%
• 13:30 US Nonfarm Employment Change. Estimate 201K
• 13:30 US Unemployment Rate. Estimate 5.0%

*Key releases are highlighted in bold

*All release times are GMT

EUR/USD for Thursday, December 3, 2015

EUR/USD December 3 at 12:05 GMT

EUR/USD 1.0543 H: 1.0613 L: 1.0543

EUR/USD Technical

• EUR/USD posted slight losses in the Asian session and the pair continues to lose ground in the European session.
• 1.0659 has strengthened as the pair trades at lower levels.
• 1.0500 is providing support and could face pressure during the day.
• Current range: 1.0500 to 1.0659

Further levels in both directions:

• Below: 1.05, 1.0359 and 1.0287
• Above: 1.0659, 1.0732, 1.0847 and 1.0941

OANDA’s Open Positions Ratio

EUR/USD ratio is showing little movement as the ratio remains close to an even split between short and long positions. This is indicative of a lack of trader bias as to what direction the pair will take next.

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.