EUR/USD – Euro Under Pressure, US Jobless Claims Ahead

EUR/USD as edged lower in the Wednesday session, as the pair continues to head lower this week. Currently, EUR/USD is trading at 1.0650. In economic news, it’s an unusually quiet schedule, with only three minor events. The US will release Crude Oil Inventories, with the markets expecting another strong surplus. The estimate stands at 2.7 million barrels. On Thursday, unemployment claims is expected to rise to 249 thousand.

Early on in 2017, Mario Draghi & Co. can sleep easier, as Eurozone growth and inflation numbers have been moving higher. Inflation, which has been at low levels for years, has climbed in recent months, buoyed by higher oil prices. This is positive news for the ECB, which has long tried to raise inflation with an ultra-loose monetary policy. Still, inflation levels remain well below the ECB’s target of 2 percent. On Monday, ECB President Mario Draghi poured cold water on hopes of a change in monetary policy due to the improved economic climate. Draghi said that the Eurozone economy was not yet strong enough to withdraw the bank’s stimulus program. Draghi’s comments sent the euro lower, as EUR/USD is down 1.2 percent this week. There are also market jitters over the French presidential elections in April. Marie Le Pen, the far-right candidate in the ring, is not only a strong supporter of Donald Trump, but is hoping to pull off a Trump-style upset win. Le Pen has promised a referendum on taking France out of the European Union, which has put further pressure on the euro.

President Donald Trump continues to create controversies on a daily basis, and his brash and undiplomatic style has not endeared him to the markets. Moreover, the lack of an economic policy from the new administration is a major source of concern and the the post-election euphoria which sent the markets higher has dissipated. The Federal Reserve, which had trumpeted that it was planning a series of hikes in 2017, was more cautious in its recent rate statement and is expected to adopt a wait-and-see attitude in the coming months. If the economy continues to grow, there is a strong likelihood of another rate hike in the first half of 2017, which is bullish for the dollar. On the other hand, if Trump makes good on his promises to “make America first” and implement protectionist policies, the greenback could lose ground.

Sentiment Hampered By French Election Concerns

EUR/USD Fundamentals

Wednesday (February 8)

  • Tentative – German 10-y Bond Auction
  • 10:30 US Crude Oil Inventories. Estimate 2.7M
  • 13:01 US 10-y Bond Auction

Thursday (February 9)

  • 8:30 US Unemployment Claims. Estimate 249K

*All release times are EST

*Key events are in bold

EUR/USD for Wednesday, February 8, 2017

EUR/USD February 8 at 5:20 EST

Open: 1.0678 High: 1.0691 Low: 1.0640 Close: 1.0650

EUR/USD Technical

S1 S2 S1 R1 R2 R3
1.0414 1.0506 1.0616 1.0708 1.0873 1.0985

EUR/USD was flat in the Asian session and has posted slight losses in European trade

  • 1.0616 is a weak support line. It could be tested during the Wednesday session
  • 1.0708 is the next resistance line

Further levels in both directions:

  • Below: 1.0616, 1.0506 and 1.0414
  • Above: 1.0708, 1.0873, 1.0985 and 1.1114
  • Current range: 1.0616 to 1.0708

OANDA’s Open Positions Ratio

EUR/USD ratio is unchanged in the Wednesday session. Currently, long and short positions are evenly split, 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.