EUR/USD – Euro Breaks Below 1.10, US Jobless Claims Next

EUR/USD continues to lose ground this week, as the pair trades slightly above the 1.10 line in the Thursday session. On the release front,  German Final CPI edged up to 0.1%, matching the forecast. The US will release Unemployment Claims, with the markets expecting a strong reading of 252 thousand. On Friday, we could see some movement from EUR/USD, as the US releases inflation, retail sales and consumer confidence numbers.

Despite a weak economy and serious concerns about Brexit, Eurozone confidence indicators are pointing sharply upwards in October. German ZEW Economic Confidence jumped to 6.2 points, while the Eurozone report climbed to 12.3 points. Both releases easily beat the estimates. Earlier in the week, Eurozone Sentix Investor Confidence report also improved, climbing to a 4-month high. Still, the sharp releases failed to prop up the euro, which has declined 1.6 percent this week and dropped below the symbolic 1.10 level for the first time since late July.

The Federal Reserve minutes highlighted the divisions concerning monetary policy. This was already apparent in the September rate vote, when three members voted against the decision to maintain rates at 0.25 percent. The minutes indicated that some of the members who voted to hold rates chose to fall in line with Janet Yellen, but are in favor of raising rates “relatively soon”. This means that Yellen will face a tough battle if she wants to hold off a rate in December, given that there is significant support for rate hike in December. The markets have priced in a December hike at 66 percent and the positive sentiment could help the US dollar continue to move higher. The Fed will next meet in November, but analysts don’t expect a move just a week before the presidential election.

EUR/USD Fundamentals

Thursday (October 13)

• 6:00 German Final CPI. Estimate 0.1%. Actual 0.1%
• 12:30 US Unemployment Claims. Estimate 252K
• 12:30 US Import Prices. Estimate 0.1%
• 14:30 US Natural Gas Storage. Estimate 84B
• 15:00 US Crude Oil Inventories. Estimate 0.4M
• 17:01 US 30-year Bond Auction

Friday (October 14)

• 12:30 US Core Retail Sales. Estimate 0.4%
• 12:30 US PPI. Estimate 0.2%
• 12:30 US Retail Sales. Estimate 0.6%
• 14:00 US Preliminary UoM Consumer Sentiment. Estimate 92.1
• 17:30 US Federal Chair Janet Yellen Speaks

*All release times are EDT

* Key events are in bold

EUR/USD for Thursday, October 13, 2016

EUR/USD October 13 at 6:40 GMT

Open: 1.1010 High: 1.1038 Low: 1.0985 Close: 1.1023

EUR/USD Technical

• EUR/USD has shown limited movement in the Asian and European sessions
• 1.0957 is providing support
• 1.1054 is a weak resistance line and could see action in the Thursday session

Further levels in both directions:

• Below: 1.0957, 1.0821 and 1.0708
• Above: 1.1054, 1.1150, 1.1278 and 1.1376
• Current range: 1.0957 to 1.1054

OANDA’s Open Positions Ratio

EUR/USD ratio is showing long positions with a majority (59%), indicative of trader bias towards EUR/USD continuing to move upwards.

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