EUR/USD – Stable Ahead of ECB Statement

EUR/USD is stable on Thursday, as the pair trades slightly above the 1.23 line. This marks the pair’s lowest level since August 2013. On the release front, today’s highlight is the ECB rate announcement. In the US, the major event of the day is Unemployment Claims, with the markets expecting a improvement from the previous reading. We’ll get a look at additional job data on Friday, with the release of Nonfarm Payrolls.

The ECB has cut interest rates to the bone and implemented asset purchases, but these measures have done little to boost weak growth and inflation levels in the Eurozone. There is strong pressure on ECB head Mario Draghi to take additional measures, such as quantitative easing (QE), which was used successfully by the US Federal Reserve to help boost the economy. However, there is resistance to QE from some quarters, such as the German central bank, so it’s unlikely that Draghi will make such a drastic move at this time. Still, if the ECB issues pessimistic forecasts about the economy in today’s rate statement or press conference, we could see the euro lose ground.

On Wednesday, 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%.

US jobless claims did not impress, as ADP Nonfarm Employment Change fell to 208 thousand, down from 230 thousand in the previous release. This was well short of the estimate of 223 thousand. We’ll get a look at the official Nonfarm Employment Change report on Friday, with the markets expecting a strong reading of 231 thousand. Will the indicator meet or beat expectations?

 

EUR/USD for Thursday, December 4, 2014

EUR/USD December 4 10:35 GMT

EUR/USD 1.2315 H: 1.2325 L: 1.2295

EUR/USD Technical

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

 

  • EUR/USD has been flat in the Asian and European sessions.
  • 1.2407 has strengthened in resistance after the pair’s recent losses.
  • 1.2286 is a weak support level. 1.2143 is next.
  • 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 almost unchanged on Thursday. This is consistent with the pair’s current lack of movement. The ratio has a majority of long positions, indicative of trader bias towards EUR/USD moving upwards.

EUR/USD Fundamentals

  • 00:30 US FOMC Member Richard Fisher Speaks.
  • 9:10 Eurozone Retail PMI. Estimate 48.9 points.
  • Tentative – Spanish 10-year Bond Auction.
  • Tentative – French 10-year Bond Auction.
  • 12:30 US Challenger Job Cuts.
  • 12:45 ECB Minimum Bid Rate. Estimate 0.05%.
  • 13:30 ECB Press Conference.
  • 13:30 US Unemployment Claims. Estimate 296K.
  • 13:30 US FOMC Member Loretta Mester Speaks.
  • 15:30 US Natural Gas Storage. Estimate -51B.
  • 17:30 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.