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EUR/USD – Euro Flat as PMIs Improve, Retail Sales Slip

The euro is stable on Wednesday, after strong gains a day earlier. In the European session, EUR/USD is trading in the mid-1.14 range. Eurozone data was mixed, as Spanish, Italian and Eurozone Services PMIs all improved, while Retail Sales dipped to 0.3%. In the US, there are two key releases – ADP Nonfarm Employment Change and ISM Non-Manufacturing PMI.

US employment numbers will be in the spotlight for the remainder of the week, led by ADP Nonfarm Employment later on Wednesday. The markets are expecting the indicator to soften in the January report. The estimates for Unemployment Claims and the official Nonfarm Employment Change also call for weaker readings. If the forecasts prove correct that the labor market has started off 2015 on a weak note, we could see the dollar lose ground against its major rivals.

In the Eurozone, there was good news from PMI reports, as Spanish, Italian and Eurozone Services PMIs all improved in January. All three readings were above the 50 level, indicative of expansion in the services sector. Meanwhile, Retail Sales, the primary gauge of consumer spending, weakened to 0.3% in December, down from 0.6% a month earlier. The indicator managed to beat the forecast of -0.1%. The euro shrugged off Wednesday’s data and has shown almost no change on the day.

Spanish releases continue to point upwards. Spanish Services PMI climbed to 56.7 points, easily beating the estimate of 54.5 points. Earlier in the week, Unemployment Change and Spanish Manufacturing PMI posted strong readings. Last week, Spanish GDP for Q4 posted a respectable gain of 0.7% in Q4. At the same time, deflation remains a serious concern, as Spanish CPI fell 1.4% in January.

EUR/USD for Wednesday, February 4, 2015

EUR/USD February 4 at 11:00 GMT

EUR/USD 1.1459 H: 1.1484 L: 1.1437

 

EUR/USD Technical

S1 S2 S1 R1 R2 R3
1.1231 1.1340 1.1426 1.1525 1.1634 1.1754

 

Further levels in both directions:

 

OANDA’s Open Positions Ratio

EUR/USD ratio is pointing to gains in long positions in Wednesday trade. This is not consistent with the lack of movement we’re seeing from the pair. The ratio has a majority of short positions, indicative of trader bias towards the euro moving lower.

EUR/USD Fundamentals

*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 [4]

Market Analyst at OANDA [5]
A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including Investing.com, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.
Kenny Fisher

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