EUR/USD – Euro Flat, Markets Eye German Economic Sentiment, US CPI

EUR/USD has started off the week quietly, as the pair trades slightly under the 1.10 line in Monday’s North American session. It’s an uneventful day on the event front, with only one economic release on the calendar. Eurozone Industrial Production posted a gain of 0.6%, beating the forecast of 0.3%. As well, ECB head Mario Draghi spoke at an event in Bologna, Italy. The markets are keeping a close eye on key releases scheduled on Tuesday – German Economic Sentiment and US CPI.

The euro has posted a remarkable turnaround since the start of December. The euro dropped perilously close to the 1.05 line, but has since rebounded sharply, gaining close to 400 points in the process. The catalyst to the euro’s surge was the ECB policy meeting on December 3, as Mario Draghi and Co. shocked the markets by not introducing any substantial monetary moves, despite the Eurozone economy languishing with little growth or inflation. The euro will face a stiff test on Tuesday as Germany and the Eurozone release the well-respected ZEW Economic Sentiment reports. If these readings fail to live up to expectations, the euro could quickly reverse directions and head south.

The markets have become somewhat spoiled with strong job numbers out of the US, so weak employment readings last week came as a rude surprise. Last week, Unemployment Claims shot up to 282 thousand, its highest level in two months. The markets had expected a reading of 266 thousand. Still, the four-week average of unemployment claims remains at low levels. This was followed by JOLT Job Openings, which slipped to 5.38 million, sharply lower than the previous month’s reading of 5.53 million. This soft figure was way off the estimate of 5.59 million. Will these weak numbers deter the Federal Reserve from  proceeding with an expected rate hike at the policy meeting on December 16? There are no guarantees as to what the Fed has in mind for the markets, but the likelihood remains very high that a rate hike will occur, to the point that we’re likely to see strong volatility in the markets if the Fed doesn’t press the rate trigger this week.

EUR/USD Fundamentals

Monday (Dec. 14)

  • 9:00 Eurozone Industrial Production. Estimate 0.3%. Actual 0.6%
  • 10:00 ECB President Mario Draghi Speaks

Upcoming Key Events

Tuesday (Dec. 15)

  • 12:30 US CPI. Estimate 0.0%
  • 12:30 US Core CPI. Estimate 0.2%

*Key releases are highlighted in bold

*All release times are GMT

EUR/USD for Monday, December 14, 2015

EUR/USD December 14 at 15:05 GMT

EUR/USD 1.0997 H: 1.0998 L: 1.0945

EUR/USD Technical

S1 S2 S1 R1 R2 R3
1.0732 1.0847 1.0941 1.1087 1.1172 1.1305
  • 1.0941 is providing weak support
  • 1.1087 is an immediate resistance line
  • Current range: 1.0941 to 1.1087

Further levels in both directions:

  • Below: 1.0941, 1.0847, 1.0732 and 1.0659
  • Above: 1.1087, 1.1172 and 1.1305

OANDA’s Open Positions Ratio

EUR/USD ratio is showing a majority of short positions (56%), indicative of trader bias towards the euro losing ground.

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.