EUR/USD is showing limited movement on Tuesday. In the European session, the pair is trading in the mid-119 range. On the release front, the Eurozone will release Spanish, Italian and Eurozone Services PMIs. The estimate for all three reports are above the 50-point line, which indicates expansion. In the US, today’s highlight is the ISM Non-Manufacturing PMI, with the markets expecting a weaker reading for December. The estimate stands at 58.2 points.
German Preliminary CPI remained stuck at the 0.0% level in December for a second straight month. This missed the very modest estimate of 0.1%. The reading comes at a crucial time, with the ECB holding a policy meeting on January 22. With the threat of deflation hanging over the Eurozone like a dark cloud, the ECB will have to seriously consider quantitative easing, which would mean buying large amounts of Eurozone bonds. QE worked well in the US, but the Federal Reserve was calling the shots and was able to implement and then taper QE as it pleased. It’s a far different story in Europe, as the powerful German Bundesbank has voiced its opposition to such a move and ECB head Mario Draghi will find it difficult to take such a dramatic step without a strong consensus. If the markets feel that the ECB will press the QE trigger, traders can expect the shaky euro to fall even further in January.
On Friday, US ISM Manufacturing PMI disappointed, falling to 55.5 points. This missed the forecast of 57.6 points and marked a 6-month low for the index. Still, market sentiment remains positive regarding the US economy, and the US dollar continues to look sharp against its major rivals. We’ll get a look at the ISM Non-manufacturing PMI on Tuesday. The markets are expecting a softer reading in the December release.
EUR/USD for Tuesday, January 6, 2015
EUR/USD January 6 at 8:20 GMT
EUR/USD 119.34 H: 1.1969 L: 1.1933
- EUR/USD has shown little movement in the Asian and European sessions. The pair is putting pressure on support at 1.1926.
- 1.2042 is an immediate resistance line.
- 1.1926 continues to have a busy week and is currently a weak support line. 1.1802 is stronger.
- Current range: 1.1926 to 1.2042
Further levels in both directions:
- Below: 119.26, 118.02, 1.1736, 1.1638 and 1.1525
- Above: 1.2042, 1.2143, 1.2286 and 1.2407
OANDA’s Open Positions Ratio
EUR/USD is pointing to gains in short positions on Tuesday. 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 the euro moving to higher ground.
- 8:15 Spanish Services PMI. Estimate 52.9 points.
- 8:45 Italian Services PMI. Estimate 51.4 points.
- 9:00 Eurozone Final Services PMI. Estimate 51.9 points.
- 14:45 US Final Services PMI. Estimate 53.8 points.
- 15:00 US ISM Non-Manufacturing PMI. Estimate 58.2 points.
- 15:00 US Factory Orders. Estimate -0.3%.
*Key releases are highlighted in bold
*All release times are GMT