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EUR/USD – Flat Start to Week for Under-1.30 Euro

The euro is looking upwards at the 1.30 level as we start the new trading week. In Monday’s European session, EUR/USD is trading in the mid-1.29 range. On the release front, German Trade Balance shot higher last month, rising to 22.2 billion euros. The sole US data release of the day is a minor event, Consumer Credit.

US employment data continues to be a concern, as the eagerly-anticipated Nonfarm Employment Change crashed to just 142 thousand on Friday, its lowest gain since January. The markets had expected a gain of 226 thousand. This follows a weak ADP Nonfarm Payrolls report as well as a rise in unemployment claims. There was better news from the services sector, as the ISM Non-Manufacturing PMI continued its impressive climb, hitting 59.6 points in August, well above the estimate of 57.3. This reading follows the ISM Manufacturing PMI, which climbed to 59.0 points. The impressive readings from the manufacturing and services sectors point to a balanced economic recovery. If US numbers continue to improve, we could see an interest rate hike in the early part of 2015.

Dramatic and unexpected monetary action by the ECB on Thursday sent the euro reeling below the 1.30 level. The markets had not expected any change to interest rates, but the ECB took the axe for the second time in three months, cutting the benchmark rate to a record low of 0.05%, down from 0.15%. As well, the deposit facility rate was lowered to -0.20% from -0.10% and the marginal lending rate dropped to 0.30% from 0.40%. ECB head Mario Draghi had more in store, saying that the central bank plans to implement an asset purchase program (QE). Draghi didn’t elaborate, saying the ECB would provide more details in October. The interest rate cuts and QE scheme are intended to bolster anemic growth in the Eurozone and combat the growing threat of deflation.

German Trade Balance started off the week in fine fashion, as the trade surplus climbed to EUR 22.2 billion, up from 16.2 billion a month earlier. This easily beat the estimate of 17.3 billion. The strong figure follows impressive German manufacturing data last week. Industrial Production gained 1.9%, its strongest showing in 2014. This handily beat the estimate of 0.5%. Factory Orders sparkled with a 4.6% last month, its highest gain since November 2011. This easily beat the estimate of 1.6%, and follows two straight declines.

 

EUR/USD for Monday, September 8, 2014

EUR/USD September 8 at 9:20 GMT

EUR/USD 1.2946 H: 1.2959 L: 1.2931

 

EUR/USD Technical

S3 S2 S1 R1 R2 R3
1.2688 1.2806 1.2905 1.2984 1.3104 1.3175

 

Further levels in both directions:

 

OANDA’s Open Positions Ratio

EUR/USD ratio is almost unchanged on Monday. This is consistent with the lack of movement we are seeing from EUR/USD. The ratio continues to show a strong majority of long positions, indicative of trader bias towards the euro breaking out and moving to higher ground.

 

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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