EUR/USD – Euro Subdued to Start off Week

It’s been a quiet start to the week for EUR/USD, which is trading at the 1.1150 in Monday’s European session. With no major releases out of Europe or the US on the schedule, it could prove to be an uneventful day for the pair. There are only two events on the calendar. Eurozone Sentix Investor Confidence is expected to drop to 7.2 points. The US will release the Labor Market Conditions Index.

As the largest economy in the Eurozone, Germany is considered the locomotive of the bloc, so German releases should be treated as market-movers. Last week, the December report for German Factory Orders posted a decline of 0.7%, compared to a gain of 1.5% a month earlier. Germany does extensive trade with China, so the downturn which has gripped the Asian giant, the world’s No. 2 economy, has produced strong ripples across the globe and taken its toll on the Eurozone manufacturing sector. We’ll get another look at German manufacturing data on Tuesday, with the release of Industrial Production. (This event has been rescheduled from Monday). The indicator recorded a decline in the November report, and another soft reading could weigh on the high-flying euro.

The euro has surged in February, climbing some 330 points last week. This marked the pair’s strongest weekly gains since March 2015, as the euro trades close to the 1.12 level. Eurozone numbers have not been particularly impressive, but the euro has taken full advantage of weak US numbers last week, as employment and service sector numbers were short of expectations. ISM Non-Manufacturing PMI, a key gauge of the services sector. The index dipped to 53.2 points in January, its worst showing since March 2014. Unemployment claims rose unexpectedly to 285 thousand, above the forecast of 279 thousand. The week wrapped up with a dismal Nonfarm Payrolls report, with a small gain of 151 thousand. The markets had expected a much stronger gain of 189 thousand. No less worrying, this figure marks a sharp drop from the previous reading of 292 thousand. These weak job numbers could mean a delay in another US rate hike until after March.

EUR/USD Fundamentals

Monday (Feb. 8)

  • 4:30 Eurozone Sentix Investor Confidence. Estimate 7.2 points
  • 10:00 US Labor Market Conditions Index

*Key events are in bold

*All release times are EST

EUR/USD for Monday, February 8, 2016

EUR/USD February 8 at 3:35 EST

Open: 1.1144 Low: 1.1128 High: 1.1158 Close: 1.1176

EUR/USD Technical

S1 S2 S1 R1 R2 R3
1.0941 1.1087 1.1172 1.1278 1.1349 1.1495
  • EUR/USD has been flat in the Asian and European sessions
  • 1.1172 remains a weak support line
  • There is resistance at 1.1278
  • Current range: 1.1172 to 1.1278

Further levels in both directions:

  • Below:1.1172,  1.1087, 1.0941 and 1.0847
  • Above: 1.1278, 1.1349 and 1.1495

OANDA’s Open Positions Ratio

EUR/USD is almost unchanged, consistent with a lack of movement from the pair. Short positions retain a strong majority of positions (60%). This points to trader bias towards the euro breaking out and heading lower.

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.