EUR/USD – Euro Dips as German Factory Orders Disappoints

EUR/USD is trading at 1.0950 in European session on Monday. On the release front, it’s a quiet start to the week. German Factory Orders posted a decline of -0.1%, within expectations. Eurozone Sentix Investor Confidence slipped to 5.5 points, much weaker than the estimate of 8.8 points. In the US, two FOMC members will deliver speeches at events in Washington. The sole economic indicator in the US is Consumer Credit, with the markets expecting the indicator to drop to $16.8 billion.

The Chinese slowdown and weak global economic conditions have taken a toll on the Eurozone manufacturing sector, as European manufacturers are struggling to cope with less demand for their products. German manufacturers are also facing tough times, as China is a major export market for the Eurozone’s largest economy. German Factory Orders contracted in January for a second straight month, with a decline of 0.1%. Although this was better than the estimate of -0.4%, continuing contraction is bound to raise concerns about the strength of the German economy. We’ll get a look at German Industrial Production on Tuesday. The indicator has managed only one gain in the past five months, although the markets are forecasting a respectable gain of 0.6%.

In the US, Nonfarm Payrolls surged to 242 thousand in January, much higher than the estimate of 195 thousand. This marked an impressive jump from the previous reading of 171 thousand. The US economy has added an average of 225,000 jobs per month since December, an impressive number considering that the economy has softened in the early part of 2016. Still, employment news was mixed, as wage growth declined by 0.1%, shy of the estimate of a 0.2% gain. This marked the first drop in wages since December 2014. This indicator is closely linked to inflation, since an increase in wages means workers have more money to spend. The indicator’s decline means that that Federal Reserve’s inflation target of about 2.0% remains far off, so the Fed, which is keeping a close eye on the weak inflation picture, is unlikely to press the rate trigger at its policy meeting later this month.

Monday (March 7)

• 2:00 German Factory Orders.Estimate -0.4%. Actual -0.1%
• 4:30 Eurozone Sentix Investor Confidence. Estimate 8.8. Actual 5.5
• All Day. Eurogroup Meetings
• 10:00 Eurozone Labor Market Conditions Index 
• 13:00 US FOMC Lael Brainard Speaks 
• 13:00 US FOMC Stanley Fischer Speaks 
• 15:00 US Consumer Credit. Estimate 16.8B

*Key events are in bold

*All release times are EST

EUR/USD for Monday, March 7, 2016

EUR/USD March 7 at 4:50 EST

Open: 1.0991 Low: 1.0944 High: 1.0997 Close: 1.0957

EUR/USD Technical

• EUR/USD was flat in the Asian session and has posted losses in European trading
• There is resistance at 1.1087
• 1.0941 remains under pressure in resistance and could break during the day
• Current range: 1.0941 to 1.1087

Further levels in both directions:

• Below: 1.0941, 1.0847, 1.0708 and 1.0616
• Above: 1.1087, 1.1172 and 1.1278

OANDA’s Open Positions Ratio

EUR/USD ratio is showing little movement to start the trading week. Long and short positions are close to evenly split, 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.