EUR/USD – Sinking Euro Slips to 16-Month Lows

The US dollar continues to rally on Wednesday, as EUR/USD has lost about 160 points since Tuesday. In the European session, the pair is trading slightly above the 1.23 line, its lowest level since August 2013. It’s a busy day on the event front in both the Eurozone and the US. In the Eurozone, Services PMIs painted a mixed picture. Spanish Services PMI fell to 52.7 points, the Italian reading improved to 51.8 and the Eurozone release was almost unchanged at 51.1 points. Eurozone Retail Sales bounced back in October with a gain of 0.4%. In the US, there are two key releases – ADP Nonfarm Employment Change and ISM Non-Manufacturing PMI.

In the Eurozone, Services PMI were mixed, but the good news was that the Italian, Spanish and Eurozone readings were all above 50, which points to expansion in the services sector. Spanish numbers had enjoyed a strong week, as jobless claims and the Manufacturing PMI were unexpectedly strong. However, the Services PMI slipped to 52.7 points, below expectations and its worse showing since October 2013. There was good news from Eurozone Retail Sales, which posted a 0.4% gain, compared to a reading of -1.3% in the previous release. However, this was short of the forecast of 0.6%.

The US manufacturing sector continues to expand, as ISM Manufacturing PMI remained strong in November. The index came in at 58.7 points, close to the previous release of 59.0 points, which marked a three-year high. The positive US manufacturing data stands in sharp contrast to the situation in the Eurozone and China. In the Eurozone, manufacturing PMIs in France, Germany and Italy contracted in November. In China, the world’s second largest economy, Manufacturing PMI edged down to 50.3 points, down from the previous reading of 50.8 points.

EUR/USD for Wednesday, December 3, 2014

EUR/USD December 3 11:10 GMT

EUR/USD 1.2336 H: 1.2391 L: 1.2323

EUR/USD Technical

S1 S2 S1 R1 R2 R3
1.2042 1.2143 1.2286 1.2407 1.2518 1.2688

 

  • EUR/USD was flat in the Asian session. The pair has lost ground in European trade.
  • 1.2407 is the next resistance line. 1.2518 is next.
  • 1.2286 is a strong support level.
  • Current range: 1.2286 to 1.2407

Further levels in both directions:

  • Below: 1.2286, 1.2143, 1.2042 and 119.26
  • Above: 1.2407, 1.2518, 1.2688, 1.2806 and 1.2905

 

OANDA’s Open Positions Ratio

EUR/USD ratio is pointing to sharp gains in long positions on Wednesday. This is due to the strong losses posted by the euro, which has led to short positions being covered and thus an increase in open long positions. The ratio has a majority of long positions, indicative of trader bias towards EUR/USD reversing directions and moving upwards.

EUR/USD Fundamentals

  • 8:15 Spanish Services PMI. Estimate 56.2 points. Actual 52.7 points.
  • 8:45 Italian Services PMI. Estimate 50.9 points. Actual 51.8 points.
  • 9:00 Eurozone Final Services PMI. Estimate 51.3 points. Actual 51.1 points.
  • 10:00 Eurozone Retail  Sales. Estimate 0.6%. Actual 0.4%.
  • 13:15 US ADP Nonfarm Employment Change. Estimate 223K.
  • 13:30 US Revised Nonfarm Productivity. Estimate 2.3%.
  • 13:30 US Revised Unit Labor Costs. Estimate 0.3%.
  • 14:45 US Final Services PMI. Estimate 56.3 points.
  • 15:00 ISM Non-Manufacturing PMI. Estimate 57.5 points.
  • 15:30 US Crude Oil Inventories. Estimate 1.1M.
  • 17:30 US FOMC Member Charles Plosser Speaks.
  • 19:00 US Beige Book.
  • 19:00 US FOMC Member Lael Brainard 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.

Kenny Fisher

Kenny Fisher

Currency Analyst at Market Pulse
Kenny Fisher joined OANDA in 2012 as a Currency Analyst. Kenny writes a daily column about current economic and political developments affecting the major currency pairs, with a focus on fundamental analysis. Kenny began his career in forex at Bendix Foreign Exchange in Toronto, where he worked as a Corporate Account Manager for over seven years.