EUR/USD – Euro Dips Despite Solid German, Eurozone Manufacturing PMIs

EUR/USD has edged lower on Wednesday, as the pair trades at the 1.06 line. On the release front, it’s a busy day after a slow start to the week. German Manufacturing PMI dipped to 54.4, slightly short of the forecast of 54.8. The Eurozone Manufacturing PMI was better, as the reading of 53.7 beat the estimate of 53.2. In the US, there are a host of major events. Core Durable Goods Orders is expected to remain steady at 0.2%, while the markets are predicting that Durable Goods Orders will jump 1.2%. Unemployment Claims have been sizzling hot and the estimate stands at 241 thousand. Finally, the FOMC minutes from the November policy meeting will be released.

The euro remains under pressure, as it struggles to remain above the 1.06 level. On Monday, EUR/USD touched a low of 1.0582, its lowest level since November 2015. Will the slide continue? A chronically weak Eurozone economy, low interest rates and negative yields have all taken a heavy toll on the currency, and there is growing talk of the euro dropping to parity with the high-flying US dollar. The last time the currencies were at parity was in December 2002. With a strong US economy and monetary divergence continuing to favor the US dollar, the pair could head lower.

The US dollar has posted impressive gains since Donald Trump won the US election earlier this month. The Brexit vote and Trump’s stunning win have fanned populism across the continent, threatening the integrity of the Eurozone. With a Fed rate hike in December a near-certainty, sentiment towards the dollar should remain high. However, Trump’s economic policy remains a mystery, so what will happen in early 2017 is a big question mark which could translate into volatility in the markets. Trump’s election platforms of increased spending and less taxes have been short on content and we will have to wait for the new Trump administration to unveil a detailed economic platform. Where does this leave the Federal Reserve? The Fed is in favor of gradual rate hikes next year, but this assumes that the US economy continues to strengthen. In testimony before a congressional committee last week, Fed chair Janet Yellen acknowledged the uncertainty created by Trump’s victory and said that the Fed might have to adjust its outlook, based on the new president’s economic policies.

EUR/USD Fundamentals

Wednesday (November 23)

  • 8:00 French Flash Manufacturing PMI. Estimate 51.5. Actual 51.5
  • 8:00 French Flash Services PMI. Estimate 52.1. Actual 52.6
  • 8:30 German Flash Manufacturing PMI. Estimate 54.8. Actual 54.4
  • 8:30 German Flash Services PMI. Estimate 54.1. Actual 55.0
  • 9:00 Eurozone Flash Manufacturing PMI. Estimate 53.2. Actual 53.7
  • 9:00 Eurozone Flash Services PMI. Estimate 53.1. Actual 54.1
  • Tentative – German 10-year Bond Auction
  • 13:30 US Core Durable Goods Orders. Estimate 0.2%
  • 13:30 US Unemployment Claims. Estimate 241K
  • 13:30 US Durable Goods Orders. Estimate 1.2%
  • 14:00 US HPI. Estimate 0.5%
  • 14:45 US Flash  Manufacturing PMI. Estimate 53.6
  • 15:00 US New Home Sales. Estimate 591K
  • 15:00 US Revised UoM Consumer Sentiment. Estimate 91.6
  • 15:00 US Revised UoM Inflation Expectations
  • 15:30 US Crude Oil Inventories. Estimate 0.3M
  • 17:00 US Natural Gas Storage. Estimate 7B
  • 19:00 US FOMC Meeting Minutes

*All release times are GMT

* Key events are in bold

EUR/USD for Wednesday, November 23, 2016

EUR/USD November 23 at 11:30 GMT

Open: 1.0633 High: 1.0644 Low: 1.0600 Close: 1.0607

EUR/USD Technical

S1 S2 S1 R1 R2 R3
1.0287 1.0414 1.0506 1.0616 1.0708 1.0821
  • EUR/USD was flat in the Asian session and has posted slight losses in European trade
  • 1.0506 is a strong support level
  • 1.0616 remains fluid. Currently, it is a weak resistance line.

Further levels in both directions:

  • Below: 1.0506, 1.0414 and 1.0287
  • Above: 1.0616, 1.0708, 1.0821 and 1.0957
  • Current range: 1.0506 to 1.0516

OANDA’s Open Positions Ratio

EUR/USD ratio is unchanged in the Wednesday session. Currently, short positions have a majority (66%), indicative of trader bias towards EUR/USD continuing to head 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.