EUR/USD – Euro Steady, US Jobs Report Next

EUR/USD has edged lower in the Tuesday session, as the pair trades at 1.0570 in North American trade. On the release front, French Industrial Production posted a sharp gain of 2.2%, easily beating the forecast of 0.5%. Later in the day, the US releases JOLTS Job Openings, with an estimate of 5.59 million.

Low inflation rates in the Eurozone have long been a headache for the ECB, which has slashed interest rates almost to zero in an attempt to kick-start the economy and raise inflation. As we enter 2017, the picture appears somewhat brighter. Inflation indicators showed improvement in the fourth quarter of 2016. CPI Flash Estimate posted a strong gain of 1.1% for December, up from 0.6% a month earlier. The last time the indicator cracked the 1.0% level was in August 2013. Next week, we’ll get a look at Final CPI numbers for Germany and the Eurozone. Although inflation indicators are moving in the right direction, inflation still remains well below the ECB’s target of 2.0%.

The US released key employment numbers on Friday and the markets responded with a thumbs-up, boosting EUR/USD. Wages rebounded in December, as Average Hourly Earnings climbed 0.4%, edging above the estimate of 0.3%. This marked a strong turnaround after the November reading of -0.1%. The news was not as bright from Nonfarm Payrolls, which dropped to 156 thousand, well off the estimate of 175 thousand. This marked a 3-month low, but the dollar still posted gains. The unemployment rate edged up to 4.7%, matching the forecast.

The US dollar was broadly lower after the Federal Reserve released the minutes of its December meeting. The minutes were cautious in tone, with Fed policymakers essentially saying that monetary policy in the coming months will be dictated in large part by the economic platform of the incoming Trump administration, which remains unclear. FOMC members expressed concern about higher inflation levels, given the “prospects for more expansionary fiscal policies in the coming years”. This is a clear reference to president-elect Trump’s plans to increase fiscal spending and cut taxes, which would likely result in higher inflation, something the US hasn’t had to deal with in years. Still, policymakers haven’t changed their view that gradual rate hikes remains an appropriate monetary policy. Many analysts are predicting another rate hike in June, but this forecast could easily change, depending on the performance of the US economy in the first half of 2017.

 

EUR/USD Fundamentals

Tuesday (January 10)

  • 7:45 French Industrial Production. Estimate 0.5%. Actual 2.2%
  • 11:00 US NFIB Small Business Index. Estimate 99.6. Actual 105.8
  • 15:00 US JOLTS Job Openings. Estimate 5.59M
  • 15:00 US Final Wholesale Inventories. Estimate 0.9%

*All release times are GMT

*Key events are in bold

 

EUR/USD for Tuesday, January 10, 2017

EUR/USD January 10 at 9:25 GMT

Open: 1.0586 High: 1.0627 Low: 1.0555 Close: 1.0571

 

EUR/USD Technical

S1 S2 S1 R1 R2 R3
1.0287 1.0414 1.0506 1.0616 1.0708 1.0873
  • EUR/USD posted slight gains in the Asian session but reversed directions in European trade. The pair is unchanged in the North American session
  • 1.0506 is providing support
  • 1.0616 was tested earlier in resistance and is a weak line

Further levels in both directions:

  • Below: 1.0506, 1.0414, 1.0287 and 1.0170
  • Above: 1.0616, 1.0708 and 1.0873
  • Current range: 1.0506 to 1.0616

OANDA’s Open Positions Ratio

EUR/USD ratio is showing slight gains in short positions. Currently, long positions have a small majority (51%), indicative of a lack of trader bias as to what direction EUR/USD 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.

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.