EUR/USD – Steady Ahead of US Unemployment Claims

EUR/USD is trading quietly on Thursday, after posting gains the day before. The pair is testing the 1.33 line in Thursday’s European session. Taking a look at economic releases, it’s been a quiet week so far, with no major releases out of the Eurozone or the US. On Thursday, however, there are two key events. ECB chair Mario Draghi delivers remarks in Latvia and the US releases the all-important Unemployment Claims. Earlier, Eurozone Industrial Production looked dismal, hitting a ten-month low.

On Thursday, Eurozone Industrial Production releases were very disappointing. Eurozone Industrial Production dropped from 0.7% in July to -1.5% in August, well off the estimate of -0.1%. This was the indicator’s sharpest drop since October 2012. Italian Industrial Production was almost as bad, declining -1.1% in August after a 0.3% gain in July. The markets had expected a gain of 0.3%. We could see the euro take a hit if manufacturing and industrial numbers don’t improve.

ECB head Mario Draghi has headed to Latvia, where he will speak at the Bank of Latvia’s Economic Conference in Riga. The timing of the trip is not coincidental, as Latvia is set to join the Eurozone on January 1, 2014. The small country of under three million will be the 18th member of the Eurozone. Latvia’s economy has been doing well, but public support for adopting the euro has been weak, with fears of rising prices and Eurozone contagion. Draghi’s remarks are often a market-mover, and analysts will be closely monitoring his speech in Riga.

US employment data has weakened recently, giving Thursday’s Unemployment Claims release added significance. Last week, both Unemployment Claims and Non-Farm Payrolls fell short of expectations, and JOLTS Job Openings didn’t look any better earlier this week. The markets continue to speculate about when the Fed will start to reduce QE, in which the Fed currently purchases $85 billion every month. There’s a strong likelihood that it will happen before the end of the year, but we’re unlikely to see a move by the Fed before the US posts better employment numbers

The Syrian crisis has taken on a new twist, as US military action, which seemed a foregone conclusion in late August, is currently on the backburner. The US and Russia are spearheading intensive efforts to come up with a diplomatic solution to the crisis. Under the proposed plan, Syria would hand over its entire arsenal of chemical weapons to the international community to be destroyed. Speaking on US television earlier in the week, President Obama said that he would delay any military action as long as a diplomatic solution was possible, but that a strike against Syria was still on the table. If the diplomatic efforts gain momentum and the crisis eases, we could see the safe-haven dollar lose ground.

EUR/USD for Thursday, September 12, 2013

EUR/USD 1.3291 H: 1.3324 L: 1.3283

EUR/USD Technical

• EUR/USD is testing the 1.33 line in Thursday trading. The next line of resistance is at 1.3410. The pair touched a high of 1.3324 late in the Asian session, but has retracted.
• On the downside, 1.3162 continues support. This line has strengthened as EUR/USD trades at higher levels. This is followed by a support level at 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 towards short positions in Thursday trading. This is reflected in the current movement of the pair, as the euro has edged lower against the US dollar. 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 is enjoying a solid week, and is testing the 1.33 line. With the US releasing its first major event of the week, Unemployment Claims, we could see some volatility from the pair later in the day.

EUR/USD Fundamentals

• 6:00 German WPI. Estimate 0.2%. Actual -0.6%.
• 6:45 French CPI. Estimate 0.5%. Actual 0.5%.
• 8:00 ECB Monthly Bulletin.
• 8:00 Italian Industrial Production. Estimate 0.3%. Actual -1.1%.
• 9:00 Eurozone Industrial Production. Estimate -0.1%. Actual -1.5%.
• 11:40 ECB President Mario Draghi Speaks.
• 12:30 US Unemployment Claims. Estimate 332K.
• 12:30 US Import Prices. Estimate 0.6%.
• 13:00 FOMC Member William Dudley Speaks.
• 14:30 US Natural Gas Storage. Estimate 65B.
• 17:00 US 30-year Bond Auction.
• 18:00 US Federal Budget Balance. Estimate. -155.3B.

*Key releases are highlighted in bold

*All release times are GMT

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.