EUR/USD – Slight Gains in Thin Trading Ahead of Holiday

EUR/USD has posted slight gains on Thursday as the pair trades at 1.0950 in the European session. It’s a quiet day on the release front, with no European releases. In the US, we’ll get a look at Unemployment Claims,with an estimate of 270 thousand.

It’s been a volatile third quarter for EUR/USD. Starting in late October, the euro was in free-fall, dropping a remarkable 800 points in just six weeks. However, the continental currency turned things around in remarkable fashion in early December, following the ECB decision not to implement further easing moves, despite hints from ECB head Mario Draghi that he was prepared to take drastic action to kick-start the moribund Eurozone economy. The markets were caught off guard by the ECB standing on the sidelines, and the euro surged 300 points in the aftermath of the ECB announcement. Since then, the euro has been generally stable, holding its own against the US dollar, despite the historic rate hike by the Federal Reserve last week.

In one of the most important economic events in 2015, the US Federal Reserve raised interest rates by 0.25 percent, the first rate hike since June 2006. The Fed got the rate ball rolling back in October, when it surprised the markets when it released a statement that it was seriously considering raising rates. Predictably, this caused a buzz in the markets about the Fed’s plans, as speculation earlier in the year about a rate hike failed to materialize. To the credit of Fed chief Janet Yellen and her colleagues, the Fed put into place a carefully-crafted strategy, sending a steady of stream of signals that it was intending to tighten monetary policy, if economic conditions remained positive. This gave the markets ample time to price in a rate hike, and currency market volatility was not excessive after the US rate hike, the first in almost 10 years. Although a hike of 0.25 percent is expected to have limited economic impact, the Fed move has given the US economy a critical vote of confidence, and this will be duly noted by the global markets. As well, this move is expected to be the first in a series of incremental rate hikes over the course of 2016, and higher interest rates means that the US dollar will become even more attractive to investors, at the expense of other currencies, such as the euro.

EUR/USD Fundamentals

Thursday (Dec. 24)

• 13:30 US Unemployment Claims. Estimate 270K
• 15:30 US Natural Gas Storage. Estimate -26K. Actual -32K

*Key releases are highlighted in bold

*All release times are GMT

EUR/USD for Thursday, December 24, 2015

EUR/USD December 24 at 12:25 GMT

EUR/USD 1.0940  H: 1.0967 L: 1.0907

EUR/USD Technical

• 1.0847 is providing support.
• 1.0941 is a weak resistance line
• Current range: 1.0847 to 1.0941

Further levels in both directions:

• Below: 1.0847, 1.0732, 1.0659 and 1.0550
• Above: 1.0941, 1.1087 and 1.1172

OANDA’s Open Positions Ratio

EUR/USD ratio is unchanged, reflective of a lack of any significant movement from the pair. Short positions command a strong majority (60%). This is indicative of trader bias towards the euro reversing directions and 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.