EUR/USD – Euro Dips Below 1.09

EUR/USD has posted losses to start the new trading week, as the pair trades just shy of the 1.09 line in the European session. On the release front, it’s a very quiet start to the week, with two minor events on the calendar. Eurozone Sentix Investor Confidence slid to 9.6 points, short of expectations. Today’s US release is the Labor Markets Condition Index.

The first trading week of 2016 ended on a high note, as US Nonfarm Payrolls surged to 292 thousand, crushing the estimate of 203 thousand. This was the strongest reading in 10 months, and underscores a strong US employment market. The unemployment rate remained unchanged at 5.0%. The Fed will probably not make another move at its policy meeting at the end of January, so soon after the historic rate hike in December. However, many experts are expecting that the Fed will raise interest rates in March. Such a move would likely make the US dollar assets more attractive to investors and boost the greenback against its rivals. If the US economy continues to heat up, the Fed is expected to continue to tighten monetary policy over the course of 2016.

The euro recovered in impressive form in December, climbing close to 300 points against the US dollar. Despite some volatility to kick off the New Year, the euro has managed to hold its own in January, as it trades around the 1.09 level. The continental currency has benefited from a number of strong releases out of the Eurozone and Germany, pointing to modest improvement in the Eurozone and German economies. In December, unemployment moved lower, while manufacturing and consumer spending numbers improved. Last week, Services PMIs out of Germany and the Eurozone beat the estimates and pointed to expansion in the services sector. These solid releases give the ECB some breathing room with regard to further easing steps, which would likely be bearish for the euro.

Last week, the Federal Reserve released the minutes of its historic December policy meeting, at which it raised rates by 0.25 percent. The minutes were noteworthy in highlighting differences among policymakers as to whether US inflation levels will improve. Indeed, some FOMC members said that their vote in favor of a rate hike was a close call because of concerns that low inflation levels will continue in 2016. What’s next? The Fed has hinted that the December rate hike was the first of a series of incremental moves in 2016, but inflation levels will play an important role in the timing and size of future rate hikes.

EUR/USD Fundamentals

Monday (Jan. 11)

  • 4:30 Eurozone Sentix Investor Confidence. Estimate 11.5 points. Actual 9.6 points
  • 10:00 US Labor Market Conditions Index

*Key events are in bold

*All release times are EST

EUR/USD for Monday, January 11, 2016

EUR/USD January 11 at 10:25 GMT

Open: 1.0947  Low: 1.0872 High: 1.0944 Close: 1.0894

EUR/USD Technical

S1 S2 S1 R1 R2 R3
1.0659 1.0732 1.0847 1.0941 1.1087 1.1172
  • The pair has posted slight losses in the Asian and European sessions
  • 1.0941 remains a weak resistance line
  • 1.0847 is providing support
  • Current range: 1.0847 to 1.0941

Further levels in both directions:

  • Below: 1.0847, 1.0732, 1.0659 and 1.0537
  • Above: 1.0941, 1.1087 and 1.1172

OANDA’s Open Positions Ratio

EUR/USD ratio is unchanged on Monday. Short positions command a strong majority (59%), indicative of trader bias towards the euro continuing to move downwards.

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.