EUR/USD – Almost Unchanged as Markets Ponder ECB Remarks

EUR/USD is almost unchanged on Friday, following gains a day earlier. In the European session, the pair is trading in the mid-1.23 range. On the release front, German Factory Orders shot up 2.5% in October. Eurozone GDP posted a small gain of 0.2%, matching the forecast. In the US, the markets are expecting a strong reading from Nonfarm Employment Change, with the estimate standing at 231 thousand. As well, the US will release the Unemployment Rate and Trade Balance.

On Thursday, ECB head Mario Draghi said that that he had no plans to implement quantitative easing for the time being and that the ECB would review its stimulus program in early 2015. The euro shot up about 130 points following the news, although it later gave back some of these gains. The ECB also downgraded its forecasts for growth and inflation, and if the Eurozone economy fails to improve, there is a reasonable likelihood that the ECB will embark on the QE route. Meanwhile, there was some unexpected good news from Germany on Friday, as Factory Orders climbed 2.5% in October, marking a three-month high. This is easily beat the forecast of a 0.6% gain.

Earlier in the week, 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%.

There was good news on the US employment front on Thursday, as jobless claims improved to 297 thousand, practically matching the forecast. We’ll get a look at the official Nonfarm Employment Change report on Friday, with the markets expecting a strong reading of 231 thousand. If the indicator meets expectations, the US dollar could take advantage and post gains.

EUR/USD for Friday, December 5, 2014

EUR/USD December 5 10:35 GMT

EUR/USD 1.2369 H: 1.2393 L: 1.2364

EUR/USD Technical

• After Thursday’s volatility, EUR/USD has shown little movement in the Asian and European sessions.
• 1.2407 is a weak resistance line. 1.2518 is stronger.
• 1.2286 is a strong support line.
• 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 gains in short positions on Friday. This is consistent with the pair’s movement, as the euro has posted small losses. The ratio has a majority of long positions, indicative of trader bias towards EUR/USD moving upwards.

EUR/USD Fundamentals

• 7:00 German Factory Orders. Estimate 0.6%. Actual 2.5%.
• 10:00 Eurozone Revised GDP. Estimate 0.2%. Actual XX
• 13:30 US Nonfarm Employment Change. Estimate 231K.
• 13:30 US Trade Balance. Estimate -41.3B.
• 13:30 US Unemployment Rate. Estimate 5.8%.
• 13:30 US Average Hourly Earnings. Estimate 0.2%.
• 13:45 US FOMC Member Loretta Mester Speaks.
• 15:00 US Factory Orders. Estimate 0.0%.
• 19:45 US FOMC Member Stanley Fischer Speaks.
• 20:00 US Consumer Credit. Estimate 16.5B.

* 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.