EUR/USD – Euro at 1.25 As Markets Eye Draghi Testimony

EUR/USD had an uneventful week, and this lack of activity has continued on Monday, as the pair trades close to the 1.25 line. On the release front, the markets will be keeping a close eye on Mario Draghi, who will testify before a European parliamentary committee in Brussels. In the US, today’s highlight is the Empire State Manufacturing Index. The markets are expecting a strong reading for October, with an estimate of 12.1 points.

ECB head Mario Draghi and his colleagues are under strong pressure to “do something” to kick-start the weak Eurozone economy. Deep interest rate cuts haven’t had much effect, so the ECB has purchased covered bonds and asset-backed securities. So far, these securities have been from the private sector, and the ECB could decide to expand these purchases to government bonds, known has quantitative easing. However, there is resistance to quantitative easing from national central banks, such as the powerful Bundesbank. We could learn more about Draghi’s plans when he testifies on Monday before the Committee on Economic and Monetary Affairs in Brussels.

There was some good news last week, as German and French growth numbers were respectable in Q3. German GDP posted a small gain of 0.1%. Germany posted a decline in Q2, and a second straight decline would have meant that the Eurozone’s largest economy was in a recession. French GDP improved to 0.3%, its best performance since Q4 of 2013. The estimate stood at 0.1%. At the same time, Eurozone inflation indicators remain very weak. German CPI declined by 0.3%, while French CPI posted a flat reading of 0.0%.

US consumer indicators looked strong on Friday. Retail Sales and Core Retail Sales both posted gains of 0.3%, edging above the estimate of 0.2%. UoM Consumer Sentiment continued its upward trend, climbing to 89.7 points in November. This was the indicator’s strongest performance since July 2007. Meanwhile, US Unemployment Claims has looked solid in recent readings, but the key indicator jumped to 290 thousand, missing the estimate of 282 thousand. This marked a seven-week high for the key indicator. The news wasn’t any better from JOLTS Jobs Openings, which weakened to 4.74M, down from 4.84M a month earlier. The estimate stood at 4.81M.

EUR/USD for Monday, November 17, 2014

EUR/USD November 17  12:15 GMT

EUR/USD 1.2495 H: 1.2577 L: 1.2483

EUR/USD Technical

• EUR/USD gained ground in the Asian session but and tested resistance at 1.2518 before reversing directions and posting sharp losses. The euro remains under pressure in European trade.
• On the downside, 1.2407 is a strong support level.
• 1.2518 was breached earlier but recovered. It remains a weak resistance line which could see more action during the day.
• Current range: 1.2407 to 1.2518

Further levels in both directions:

• Below: 1.2407, 1.2286, 1.2143, 1.2042 and 1.1875
• Above: 1.2518, 1.2688, 1.2806 and 1.2905

OANDA’s Open Positions Ratio

EUR/USD ratio is pointing to gains in long positions on Monday. This is not consistent with the pair’s movement, as the euro has posted small losses. The ratio is almost an even split between long and short positions, indicative of a lack of trader bias towards what direction to expect from EUR/USD.

EUR/USD Fundamentals

• 9:00 Italian Trade Balance. Estimate 2.68B. Actual 2.01B.
• 10:00 Eurozone Trade Balance. Estimate 16.2B. Actual 17.7B.
• 11:00 German Buba Monthly Report.
• 13:30 US Empire State Manufacturing Index. Estimate 12.1 points.
• 14:00 ECB President Draghi Speaks.
• 14:15 US Capacity Utilization Rate. Estimate 79.3%.
• 14:15 US Industrial Production. Estimate 0.2%.

*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.