EUR/USD: Modest Losses as Eurozone Manufacturing Data Slips

EUR/USD has edged lower on Thursday, as the pair trades in the mid-1.36 range in the European session. On the release front, French and Italian Industrial Production both posted sharp declines. Today’s highlight in the US is Unemployment Claims. Little change is expected from the previous release.

The Federal Reserve minutes did not shed much light on when the Fed plans to raise interest rates, but policymakers did agree to wind up the QE scheme by October. The asset purchase program flooded the economy with over $2 trillion, and the Fed has been steadily reducing the program since last December. Winding down QE will require several more tapers by the Fed, but that shouldn’t pose a problem, given the solid employment data the economy has been churning out. EUR/USD did not show much response to the low-key minutes, with the euro posting slight gains on Wednesday.

Eurozone growth continues to stumble, and there was no relief from Thursday’s manufacturing numbers. Italian Industrial Production came in at -1.2%, compared to the estimate of +0.6%. This was the worst showing since October 2012. French Industrial Production looked even worse, posting a decline of 1.7%. The markets had expected a respectable gain of 0.5%.

The week started with some positive news out of Germany, after a rash of weak data from the Eurozone’s largest economy. Trade Balance improved last month, posting a surplus of EUR 18 billion, the highest reading since last October. This easily surpassed the estimate of EUR 15.7 billion. German retail sales, employment and manufacturing data softened in May, raising concerns that a weakening German economy could dash hopes of growth in the Eurozone and hurt the euro.

EUR/USD for Thursday, July 10, 2014

EUR/USD July 10 at 10:25 GMT

EUR/USD 1.3625 H: 1.3651 L: 1.3620

EUR/USD Technical

• EUR/USD edged lower late in the Asian session and this trend continues in the European session.
• 1.3585 is a weak support level. 1.3487 is stronger.
• On the upside, 1.3651 is under strong pressure. Will this line fall during the day? 1.3786 is next.
• 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 short positions on Thursday, continuing the trend which has marked most of the week. This is consistent with the movement of the pair, as the euro has posted slight losses. The ratio has a majority of short positions, indicative of trader bias towards the dollar continuing to post gains against the euro.

EUR/USD Fundamentals

• 6:45 French Industrial Production. Estimate 0.5%. Actual -1.7%.
• 6:45 French CPI. Estimate 0.2%. Actual 0.0%.
• 8:00 ECB Monthly Bulletin.
• 8:00 Italian Industrial Production. Estimate 0.6%. Actual -1.2%.
• 12:30 US Unemployment Claims. Estimate 316K.
• 14:00 US Wholesale Inventories. Estimate 0.6%.
• 14:30 US Natural Gas Storage. Estimate 92B.
• 17:01 US 30-year Bond Auction.
• 20:30 US FOMC Member Stanley Fischer 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.