EUR/USD – Euro Kicks Off Week With Strong Gains

EUR/USD started the new trading week on a positive note, as the pair recorded gains of close to one cent on Monday. The pair has settled down on Tuesday, trading in the mid-1.32 range in the European session. There are only a handful of events on Tuesday. French Industrial Production looked weak, posting its third consecutive decline. Today’s highlight is US JOLTS Job Openings, with the markets not expecting much change from this important employment indicator.

We have seen stronger confidence indicators out of the Eurozone, and Sentix Investor Confidence continued the positive trend on Monday. The indicator shot up from -4.9 points in July to a solid +6.5 points in August. Remarkably, this is the first reading above zero since August 2011, indicative of entrenched pessimism among investors over the past two years. The markets will be hoping that other confidence indicators follow suit with strong readings.

The US ended last week on a disappointing note, as the all-important Non-Farm Payrolls came in at 169 thousand, missing the estimate of 178 thousand. The Unemployment Rate dropped from 7.4% to 7.3%, but this improvement is not all that significant, given the low participation rate in the labor force. The Fed continues to keep its cards away from prying market eyes, but we’re unlikely to see QE tapering without stronger employment numbers. Chicago Fed President Charles Evans hinted that we could see some action on this front from the Fed before the end of the year.

Meanwhile, tensions over Syria continue. A US military strike is likely, but the diplomatic activity continues in an attempt to end the crisis without a US attack. The story is expected to unfold as early as this week, as Congress gears up for a vote on whether to approve military action against Syria. We can expect some volatility in the markets as tensions continue.

EUR/USD for Tuesday, September 10, 2013

EUR/USD 1.3244 H: 1.3276 L: 1.3235

EUR/USD Technical

• EUR/USD is trading quietly in the mid-1.32 range in Monday trading.
• The pair continues to face resistance at the round number of 1.33. The next line of resistance is at 1.3410.
• On the downside, 1.3162 is providing support. This line has some breathing room as EUR/USD trades at higher levels. This is followed by a support level at the round number of 1.3100. This line has remained intact since mid-June.
• Current range: 1.3162 to 1.3300

Further levels in both directions:

• Below: 1.3162, 1.3100, 1.3050 and 1.3000
• Above: 1.3300, 1.3410, 1.3476, 1.3585 and 1.3649

OANDA’s Open Positions Ratio

EUR/USD ratio is pointing to movement towards short positions. This is reflected in the current movement of the pair, as the euro has dropped slightly on Tuesday. The ratio continues to have a solid majority of short positions, indicative of a strong trader bias towards the US dollar making gains at the expense of the euro.

EUR/USD has settled down after some strong gains on Monday. With the US releasing employment data later on, we could see some increased movement from the pair if the release is not in line with market expectations.

EUR/USD Fundamentals

• 6:45 French Industrial Production. Estimate 0.7%. Actual -0.6%.
• 11:30 US NFIB Small Business Index. Estimate 94.8 points.
• 14:00 US JOLTS Jobs Openings. Estimate 3.96M.

*Key releases are highlighted in bold

*All release times are GMT

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