EUR/USD – Limited Movement as German Markets Take Early Holiday

As expected, it’s been an uneventful week for EUR/USD, which is trading at the 1.22 line Wednesday. The euro remains under pressure, as the currency trades at its lowest level since August 2012. German markets will be closed for the rest of the week and there are no releases out of the Eurozone until next week. In the US, today’s highlight is Unemployment Claims. The key indicator is usually released each Thursday, but has been brought forward due to the Christmas holiday. The markets are not expecting much change from the previous release, with the estimate standing at 291 thousand.

In the US, there were a host of key events on Tuesday, with mixed results. GDP was red-hot in Q3, jumping 5.0%, ahead of the estimate of 4.6%. This marked the indicator’s strongest gain since the third quarter of 2003. The US economy is expected to continue to surge in 2015, driven by increased consumer spending and lower oil prices. The news was not as positive from Core Durable Goods Orders, which posted a decline of 0.4%, its fourth decline in five readings. The reading was well off the estimate of 1.1%. Durable Goods Orders looked even worse, with a reading of -0.7%. This surprised the markets which had anticipated a strong gain of 3.0%. Elsewhere in the US, housing data continues to weaken as New Home Sales slipped to 438 thousand, its poorest showing since July and well short of the forecast of 461 thousand. UoM Consumer Sentiment continues to rise, hitting 93.6 points in December. This marked its highest level since February 2007, as the US consumer remains very optimistic about the economy as we move into 2015.

The Eurozone economy continues to struggle with low growth and weak inflation, but recent releases out of Germany, the Eurozone’s largest economy, give room for some optimism. The January forecast for German Consumer Climate came in at 9.0 points, a notch above the estimate of 8.9 points. This marked the fourth straight rise for the indicator, pointing to stronger optimism from consumers as we head into the New Year. These strong numbers come on the heels of German Business Climate, which improved to 105.5 points, up from 104.4 a month earlier. This edged above the forecast of 105.4 points. On the inflation front, German PPI, which tracks manufacturing inflation, improved to 0.0% in November, up from -0.2% a month earlier. Like the consumer confidence indicator, this release is on an upward trend. Strong German consumer and business confidence numbers are welcome news, as the Eurozone economy continues to struggle.

EUR/USD for Wednesday, December 24, 2014

EUR/USD December 24 at 10:10 GMT

EUR/USD 1.2205 H: 1.2208 L: 1.2169

EUR/USD Technical

S1 S2 S1 R1 R2 R3
1.1926 1.2042 1.2143 1.2286 1.2407 1.2518

 

  • EUR/USD was flat in the Asian session. The pair has edged higher in the European session.
  • 1.2143 is an immediate support level.
  • 1.2286 is the next resistance line.
  • 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 unchanged on Wednesday, continuing the trend we have seen throughout the week. This is consistent with the pair’s limited movement, as the euro has shown very small gains. The ratio has a majority of long positions, indicative of trader bias towards the euro moving to higher ground.

EUR/USD Fundamentals

  • 13:30 US Unemployment Claims. Estimate 291K.
  • 15:30 US Crude Oil Inventories. Estimate -2.4M.
  • 17:00 US Natural Gas Storage. Estimate -81B.

* 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.