EUR/USD – Euro Struggling at 2.5 Year Lows

EUR/USD is almost unchanged on Monday, following gains a day earlier. In the European session, the pair is trading in the mid-1.22 range. The wobbly euro finds itself at its lowest level against the dollar since August 2012. On the release front, there are no major releases out of the Eurozone or the US. German Industrial Production dropped to 0.2%, while Eurozone Sentix Investor Confidence came in at -2.5 points. In the US, today’s sole event is the Labor Market Conditions Index, a new indicator which the Federal Reserve introduced in October.

Eurozone numbers were not impressive to start off the week. German Industrial Production posted a weak gain of 0.2%, compared to a 1.4% gain a month earlier. Investor confidence remains low, as the Eurozone Sentix Investor Confidence report recorded a decline of 2.5 points, a fourth straight decline.

US employment data stole the show last week, as Nonfarm Payrolls shot up to 321 thousand in November, stunning the markets which had expected a rise of 231 thousand. There was also a rise in wages, which translate into stronger inflation numbers. The unemployment rate held steady at 5.8%, matching the forecast. The excellent Nonfarm Payrolls should help allay concerns about whether the economy can weather a rate increase in 2015.

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.

EUR/USD for Monday, December 8, 2014

EUR/USD December 8th 10:40 GMT

EUR/USD 1.2252 H: 1.2304 L: 1.2248

EUR/USD Technical

S1 S2 S1 R1 R2 R3
119.26 1.2042 1.2143 1.2286 1.2407 1.2518

 

  • EUR/USD was flat in the Asian session. The pair has edged lower in European trade, breaking support at 1.2286.
  • 1.2286 is a weak resistance line. Will the pair break below this line? 1.2407 is stronger.
  • 1.2143 is a strong support level.
  • Current range: 1.2143 to 1.2286

Further levels in both directions:

  • Below: 1.2143, 1.2042, 119.26 and 118.02
  • Above: 1.2286, 1.2407, 1.2518, 1.2688 and 1.2806

 

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 has a majority of long positions, indicative of trader bias towards EUR/USD moving upwards.

EUR/USD Fundamentals

  • 7:00 German Industrial Production. Estimate 0.2%. Actual 0.2%.
  • 9:30 Eurozone Sentix Investor Confidence. Estimate -9.9 points. Actual -2.5 points.
  • All Day – Eurogroup Meetings.
  • 15:00 US Labor Markets Conditions Index.

* 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.