EUR/USD – Euro Dips Towards 1.08

EUR/USD is showing limited movement on Wednesday, as the pair trades at 1.0820 in the European session. On the release front, French CPI posted a weak gain of 0.2%, within expectations. Eurozone Industrial Production posted a decline of 0.7%, well off the estimate. In the US, there are no major releases on the schedule. The markets are keeping an eye on Unemployment Claims, which will be released on Thursday.

The euro remains under pressure, and has lost over 100 points against the US dollar so far this week. The continental currency didn’t get any help from Wednesday’s economic releases out of the Eurozone. French CPI posted a gain of 0.2% as low inflation levels continue to hamper the Eurozone economy. Eurozone Industrial Production disappointed with a reading of -0.7%, the sharpest drop since August 2014. The ECB meets for its monthly policy meeting next week, and if Eurozone releases miss expectations, the central bank could step in with additional monetary easing.

US employment numbers continue to shine, underscoring a robust US labor market. On Tuesday, JOLTS Job Openings improved to 5.43 million, beating the estimate of 5.41 million and above the previous reading of 5.38 million. Late last week, Nonfarm Employment Change surged to 292 thousand, crushing the estimate of 203 thousand. This was the strongest reading in 10 months. The unemployment rate remained unchanged at 5.0%, within the Federal Reserve’s definition of “full employment”. One area of concern in the employment picture is that of wage growth, which has not kept up with the strong improvement in payrolls. Even if the US economy is technically at “full employment”, slack remains in the labor market, meaning that employers are not feeling under any pressure to raise wages. This was underscored by the Average Hourly Earnings in December, which posted a flat reading of 0.0%, short of the forecast of 0.2%. This key event is a leading indicator of consumer inflation, meaning that wages must increase before consumers spend more, thus leading to more inflation. The Fed has hinted that the December rate is the first of a series of incremental moves in 2016, and inflation levels will play an important role in any decision to raise rates.

EUR/USD Fundamentals

Wednesday (Jan. 13)

  • 2:45 French CPI. Estimate 0.1%. Actual 0.2%
  • 5:00 Eurozone Industrial Production. Estimate -0.2%
  • Tentative – German 10-year Bond Auction
  • 10:30 US Crude Oil Inventories. Estimate 1.9M
  • 13:01 US 10-year Bond Auction
  • 14:00 US Beige Book
  • 14:00 US Federal Budget Balance. Estimate -2.7B

Upcoming Key Events

Thursday (Jan. 14)

  • 8:30 US Unemployment Claims. Estimate 275K

*Key events are in bold

*All release times are EST

EUR/USD for Wednesday, January 13, 2016

EUR/USD January 13 at 5:25 GMT

Open: 1.0842 Low: 1.0805 High: 1.0849 Close: 1.0817

EUR/USD Technical

S1 S2 S1 R1 R2 R3
1.0537 1.0659 1.0732 1.0847 1.0941 1.1087
  • EUR/USD has posted slight losses in the Asian and European sessions
  • 1.0732 is providing support
  • 1.0847 has switched to a resistance role as the euro trades at lower levels
  • Current range: 1.0732 to 1.0847

Further levels in both directions:

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

OANDA’s Open Positions Ratio

EUR/USD ratio is showing little movement. Short positions command a strong majority (57%), 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.