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EUR/USD – Euro Edges Higher After Weak Current Account

EUR/USD has edged higher on Monday, as the pair trades in the low-1.35 range in the European session. The US wrapped up a disappointing week on Friday with the Empire State Manufacturing Index, which slumped to a ten-month low. Eurozone releases started the week on a disappointing note, as Current Account posted its smallest surplus in almost a year. It’s a quiet start to the week in the US, with no major US releases on Monday.

Eurozone Current Account was dreadful in October, as the surplus dropped to 13.7 billion euros, compared to 17.4 billion in the previous release. This was well short of the estimate of 18.3 billion. Current Account is closely linked to currency demand, with a smaller surplus indicative of decreased purchases of euros by foreigners for Eurozone goods and services. So, this weak reading could spell trouble for the euro.

Late last week, Federal Reserve chair-elect Janet Yellen testified before the powerful Senate Banking Committee. Yellen has been an ardent supporter of QE, and told the committee that the present level of asset purchases should continue until growth improves and unemployment falls. She said that the labor market and economy are performing “far short of their potential”, but added that she expects inflation to remain below the Fed’s target of 2%. Yellen, who is slated to become the first woman to head the Federal Reserve, will take over from Bernard Bernanke in January.

The Eurozone continues to be marked by low inflation, and this was underscored by Friday’s inflation numbers. CPI came in at 0.7%, and Core CPI posted a gain of 0.8%. Although both indexes matched the forecast, they dropped below last month’s numbers, pointing to weakening inflation in the Eurozone. These figures come on the heels of weak Eurozone GDP releases on Thursday. The ECB lowered interest rates earlier in November in an attempt to improve economic growth and raise inflation, and the markets will be carefully monitoring upcoming releases for signs of improvement following the rate cut.


EUR/USD for Monday, November 18, 2013

Forex Rate Graph 21/1/13

EUR/USD November 18 at 11:45 GMT

EUR/USD 1.3509 H: 1.3518 L: 1.3475


EUR/USD Technical

S3 S2 S1 R1 R2 R3
1.3325 1.3410 1.3500 1.3585 1.3649 1.3786


Further levels in both directions:


OANDA’s Open Positions Ratio

EUR/USD ratio is picking up where it left off on Friday, pointing to slight gains in short positions in Monday trading. This is not reflected in the pair’s movement, as the euro has edged higher. A large majority of the open positions remain short, indicative of a trader bias towards the dollar continuing to post gains against the euro.

The euro continues to trade in the low-1.35 range. With no major US releases on Monday’s schedule, it could be a quiet day for the pair.


EUR/USD Fundamentals


*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.

Kenny Fisher

Kenny Fisher [4]

Market Analyst at OANDA [5]
A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including Investing.com, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.
Kenny Fisher

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