EUR/USD – Euro Steady Ahead of US Jobless Claims

EUR/USD has posted slight losses on Thursday, as the pair trades at 114.50 in the European session. On the release front, there are no major Eurozone releases and German markets are closed for a holiday. In the US, today’s key event is Unemployment Claims, with the indicator expected to rise slightly to 261K. We could see stronger movement from EUR/USD on Friday, as the US releases three key employment indicators – Average Hourly Earnings, the Unemployment Rate and Nonfarm Payrolls.

Eurozone Services PMI reports were released on Wednesday, and the numbers were positive. German Final Services PMI improved to 54.5 points, easily beating the estimate of 50.5 points. Although this figure was slightly below the previous month, it points to expansion in the services sector. Eurozone Final Services PMI was unchanged at 53.1 points, within expectations. At the same time, retail sales, the primary gauge of consumer spending, is hurting. Eurozone Retail Sales declined 0.5%, surprising the markets which had expected a 0.1% gain. Last week, German Retail Sales also dropped, coming in at -1.1%. This marked a second straight decline and was the weakest reading since June 2015. Consumer Spending is one of the most important engines of economic growth, so these weak numbers are sure to raise alarm bells at the ECB, as it ponders what steps to take in order to revitalize a struggling economy.

ADP Nonfarm Payrolls was very low in April, dropping to just 156 thousand. This was the weakest reading in over two years, and surprised the markets, which have grown accustomed to releases above the 200-thousand level. We’ll get a look at Unemployment Claims later on Thursday and the all-important Nonfarm Payrolls on Friday. The employment picture has been a bright spot in the US economy, as unemployment remains at very low levels and Nonfarm Payrolls have been above the 200-thousand threshold. Despite the robust labor market, however, consumer confidence and spending has not kept pace. Last week, UoM Consumer Sentiment dipped to 89.0 points short of the estimate of 90.3 points. This also marked the fourth straight drop for the key indicator. Consumer spending is a key engine of economic activity, and softer numbers in the first quarter were an important reason that US GDP weakened in the first quarter, with a lukewarm reading of 0.5%.

EUR/USD Fundamentals

Thursday (May 5)

  • 8:00 ECB Economic Bulletin
  • Tentative – Spanish 10-year Bond Auction
  • 11:30 US Challenger Job Cuts
  • 12:30 US Unemployment Claims. Estimate 261K
  • 14:30 US  Natural Gas Storage. Estimate 69B
  • 15:30 US FOMC Member James Bullard Speaks
  • 23:15 US FOMC Member James Bullard Speaks

Upcoming Key Events

Friday (May 6)

  • 12:30 US Average Hourly Earnings. Estimate 0.3%
  • 12:30 US Nonfarm Employment Change. Estimate 203K
  • 12:30 US Unemployment Rate. Estimate 5.0%

*Key events are in bold

*All release times are GMT

EUR/USD for Thursday, May 5, 2016

EUR/USD May 5 at 8:30 GMT

Open: 1.1490 Low: 1.1439 High: 1.1493 Close: 1.1445

EUR/USD Technical

S1 S2 S1 R1 R2 R3
1.1172 1.1278 1.1378 1.1495 1.1609 1.1711
  • EUR/USD was flat in the Asian session and has posted slight losses in European trading
  • 1.1495 remains fluid and is currently a weak resistance line
  • 1.1378 is providing support

Further levels in both directions:

  • Below: 1.1378, 1.1278 and 1.1172
  • Above: 1.1495, 1.1609, 1.1711 and 1.1800
  • Current range: 1.1378 to 1.1495

OANDA’s Open Positions Ratio

EUR/USD ratio is unchanged on Thursday, consistent with the lack of movement from EUR/USD. Short positions command a strong majority (67%). This is indicative of strong trader bias towards EUR/USD continuing to move to lower 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.