EUR/USD: Steady as German Data Continues to Struggle

EUR/USD is steady on Monday, as the pair trades close to the 1.36 line in the European session. It’s a quiet start to the week, with no US releases on the schedule. In the Eurozone, German Industrial Production posted a decline, while Sentix Investor Confidence improved in June. As well, the Eurozone finance ministers meet in Brussels.

German data continues to look sluggish, as the largest economy in the Eurozone is showing signs of distress. On Monday, Industrial Production came in at -1.8%, its sharpest decline since November 2012. The markets had expected a modest gain of 0.3%. Last week’s releases pointed to trouble in the Eurozone’s largest economy, with weak figures from Retail Sales, Unemployment Change and Factory Orders. If German numbers continue to miss expectations, we could see the euro lose ground.

US employment numbers were the perfect prelude to a long holiday weekend in the US, as Nonfarm Payrolls and the Unemployment Rate sparkled. Nonfarm Payrolls, one of the most important indicators, bounced back in June with a strong gain of 288 thousand new jobs. This crushed the estimate of 214 thousand. Unemployment Claims was steady at 315 thousand, almost replicating the estimate of 314 thousand. There was more good news from the Unemployment Rate, which continues to move downward. The indicator dipped to 6.1%, its lowest level since September 2008. The strong employment numbers are sure to increase speculation about an interest rate hike by the Federal Reserve, and remarks by Fed policymakers will be under the market microscope.

As widely expected, the ECB maintained the benchmark interest rate at 0.15% at its July policy meeting. This was is sharp contrast to the previous meeting, in which the ECB lowered the benchmark rate from 0.25% and introduced negative deposit rates for the first time. At this week’s meeting, ECB head Mario Draghi noted that inflation rates remain very low, and said that the ECB was ready to implement “unconventional instruments” if necessary. As well, Draghi reiterated that the ultra-low interest rates would remain at current levels or lower for the foreseeable future.

EUR/USD for Monday, July 7, 2014

EUR/USD July 7 at 10:15 GMT

EUR/USD 1.3590 H: 1.3601 L: 1.3576

EUR/USD Technical

• EUR/USD was steady in the Asian session. The pair pushed above the 1.36 line earlier in the European session.
• On the downside, the pair is testing support at 1.3585. Will this line fall? 1.3487 follows.
• 1.3651 is the next line of resistance. 1.3786 is stronger.
• Current range: 1.3585 to 1.3651

Further levels in both directions:

• Below: 1.3585, 1.3487, 1.3346 and 1.3295
• Above: 1.3651, 1.3786, 1.3893 and 1.40

OANDA’s Open Positions Ratio

EUR/USD ratio is pointing to gains in long positions on Monday, continuing the trend seen late last week. This is not consistent with the movement of the pair, as the pair has showed little movement. The ratio is almost evenly split between long and short positions, indicative of a lack of trader bias as to the next move by EUR/USD.

EUR/USD Fundamentals

• 6:00 German Industrial Production. Estimate +0.3%. Actual -1.8%.
• 8:30 Eurozone Sentix Investor Confidence. Estimate 7.5 points. Actual 10.1 points.
• All Day – Eurogroup Meetings.

*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.