EUR/USD – Euro Firm After Recent Gains

The euro continues to trade at high levels, as EUR/USD trades in the high-1.38 range, thanks to strong gains late last week. On Friday, US Nonfarm Payrolls looked sharp, hitting a three-month high. It’s a slow start to the new week, with just a handful of events. In the Eurozone, French Industrial Production disappointed with a decline. The sole US release today is a speech by FOMC member Charles Plosser.

Nonfarm Payrolls wrapped up the week on a high note, as the key employment release jumped to 175 thousand in February, up from 1113 thousand a month earlier, This was well above the estimate of 151 thousand. The Unemployment rate edged up to 6.7%, slightly above the estimate of 6.6%.  With a solid Unemployment Claims earlier last week, the markets can breathe more comfortably as the Fed is likely to take its scissors and trim QE next week for the third time. New York Fed President William Dudley stated last week that the threshold to alter the Fed’s program to wind up QE was “pretty high”. In other words, short of a serious economic downturn in the US economy, we can expect the QE tapers to continue.

Mario Draghi and his crew at the ECB helped the euro shoot up on Thursday, but this time it was due to a lack of action by the central bank, rather than a change in monetary policy or any dramatic comments by Draghi. There had been speculation that the ECB might lower deposit rates into negative territory or even commence a mini-QE scheme. In the end, the Bank held the course, with Draghi reiterating his well-worn script that the ECB’s high degree of accommodative monetary policy would continue for as long as needed. He also noted that the Eurozone economy was recovering at a moderate pace, and shrugged concerns about inflation levels well below the ECB’s target of 2%. Draghi may be able to point to encouraging data out of Germany to bolster his case that the region is headed in the right direction, but the data from other major economies, such as France and Italy, raise questions about the health of the Eurozone.

French releases continue to struggle, as Industrial Production fell by 0.2%, its fourth decline in five readings. The markets had expected a gain of 0.6%. Trade Balance weakened in February and Consumer Spending posted a sharp decline, pointing to weak consumer confidence in the economy. Italian Industrial Production improved nicely in February, climbing 1.0%. This beat the estimate of 0.4%.

EUR/USD for Monday, March 10, 2014

EUR/USD March 10 at 10:40 GMT

EUR/USD 1.3879 H: 1.3898 L: 1.3869

EUR/USD Technical

• EUR/USD is drifting in Monday trade. The pair touched a high of 1.3798 early in the European session.
• On the upside, 1.3893 is a weak line and was tested earlier in the day. The key psychological line of 1.40 follows.
• 1.3786 is providing strong support.
• Current range: 1.3786 to 1.3893

Further levels in both directions:

• Below: 1.3786, 1.3649, 1.3585, 1.3410 and 1.3347
• Above: 1.3893, 1.4000, 1.4149 and 1.4307.

OANDA’s Open Positions Ratio

EUR/USD ratio has pointed to gains in short positions in Monday trading. This is not consistent with the pair’s current movement, which is showing very little movement. Short positions retain a strong majority, indicative of trader bias towards the dollar breaking out and moving higher.

The euro continues to trade at high levels and is within striking distance of the 1.39 line. EUR/USD has edged lower in the European session.

EUR/USD Fundamentals

• 7:45 French Industrial Production. Estimate 0.6%. Actual -0.2%.
• 9:00 Italian Industrial Production. Estimate 1.0%. Actual 0.4%.
• 9:30 Eurozone Sentix Investor Confidence. Estimate 14.3. Actual 13.9.
• All Day Eurogroup Meetings.
• 10:15 US FOMC Member Charles Plosser Speaks.

*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.