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EUR/USD – Higher As Eurozone PMIs Paint Mixed Picture

EUR/USD has posted gains in Monday trading, as the pair trades in the high-1.37 range. In economic news, German and Eurozone PMIs were positive, while French PMIs missed their estimates. Later in the day, ECB President Mario Draghi will speak on monetary policy before a parliamentary committee in Brussels. In the US, today’s highlights include the Empire State Manufacturing Index and Industrial Production. 

It was a busy start to the week, as the Eurozone released a host of PMI numbers. Eurozone Service and Manufacturing PMIs remained above 50, which indicates expansion. German Flash Manufacturing PMI climbed to 54.2 points, while the Services PMI missed the estimate, but came in at a respectable 54.0 points. French PMIs looked weak, with the Manufacturing PMI dropping to 47.1 and the Services PMI coming in at 47.4 points. A reading below the 50-point level signals contraction.

US employment numbers have generally been solid recently, although last week’s disappointed, posting a nine-week high.  The Fed has said that a stronger employment picture is a prerequisite to tapering, and there is speculation that the Fed could make a move this week, although there’s a greater likelihood that we won’t see a taper until early next year. Still, the Fed policy meeting is the event of the week and will be closely monitored by the markets. Currently, the Fed is purchasing $85 billion in assets every month, and a Fed taper would likely boost the US dollar against the major currencies.

There was some good news on the fiscal front last week, as the US House of Representatives easily passed a budget deal on Thursday. The agreement, which will be voted on by the Senate this week, removes the risk of another government shutdown next month and reduces the deficit by a modest $23 billion. Democrats and Republicans both had criticism of the proposal, but there is general agreement in Washington that the compromise reached is a positive step which removes some of the fiscal uncertainty we’ve seen in recent months.

EUR/USD for Monday, December 16, 2013

Forex Rate Graph 21/1/13

EUR/USD December 16 at 11:45 GMT

EUR/USD 1.3783 H: 1.3788 L: 1.3738

EUR/USD Technical

S3 S2 S1 R1 R2 R3
1.3500 1.3585 1.3649 1.3786 1.3893 1.4000

Further levels in both directions:

OANDA’s Open Positions Ratio

EUR/USD ratio is unchanged in Monday trading. This is not reflected in the pair, as the euro has started the week with gains at the expense of the dollar. A large majority of the open positions remain short, indicative of a trader bias towards the dollar reversing directions and posting gains against the euro.

The euro has been strengthening in the European session. If this upward trend continues during the day, we could see EUR/USD test the 1.38 level.

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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