EUR/USD – Euro Climbs Above 1.06, Markets Eye Draghi Testimony

EUR/USD has started the new trading week with gains, erasing Friday’s losses. Currently, the pair is trading at 1.0640. On the release front, there are no economic indicators in the Eurozone or the US. However, traders should treat today’s lone event as a market-mover. ECB President Mario Daraghi will testify about the ECB’s 2015 Annual Report before the European Parliament in Strasbourg.

The euro suffered another bad week and has posted ten straight losing daily sessions. EUR/USD has declined some 4.3 percent since November 7 and dipped below the 1.06 line last week, its lowest level since November 2015. Will the slide continue? The euro is the second-most important currency in the international monetary system, but an ECB report back in June found that the currency’s significance in global trade is on the decline. A chronically weak Eurozone economy, low interest rates and negative yields have all taken a heavy toll on the euro, and there is growing talk of the euro dropping to parity with the high-flying US dollar (the last time the currencies were at parity was in December 2002). Remarkably, EUR/USD was trading at the 1.40 level in May 2014, underscoring the euro’s tremendous decline against the dollar.

The US dollar posted sharp gains on Thursday, following Fed Chair Yellen’s appearance before a congressional committee. Yellen did not explicitly acknowledge that the Fed would raise rates at the December 13-14 policy meeting, but she did say that the rate hike would be “relatively soon”. Yellen make no mention of Donald Trump’s potential policies, which could include greater fiscal spending, as she reiterated that future rate hikes should be “gradual”. The odds of a rate hike next month currently stand at 95 percent. Commenting on Yellen’s testimony, Jonathan Wright, a former Fed economist, summed up market sentiment –  “a rate hike in December is a done deal, barring a significant surprise in the next jobs numbers or in financial markets”.

EUR/USD Fundamentals

  • 16:00 ECB President Mario Draghi Speech

*All release times are GMT

* Key events are in bold

EUR/USD for Monday, November 21, 2016

EUR/USD November 21 at 9:50 GMT

Open: 1.0582 High: 1.0649 Low: 1.0582 Close: 1.0639

EUR/USD Technical

S1 S2 S1 R1 R2 R3
1.0414 1.0506 1.0616 1.0708 1.0821 1.0957
  • EUR/USD was flat in the Asian session but has posted considerable gains in European trade
  • 1.0616 has switched to a support role following gains by EUR/USD. This line remains fluid
  • There is resistance at 1.0708

Further levels in both directions:

  • Below: 1.0616, 1.0506, 1.0414 and 1.0287
  • Above: 1.0708, 1.0821 and 1.0957
  • Current range: 1.0616 to 1.0708

OANDA’s Open Positions Ratio

EUR/USD ratio is unchanged in the Monday session. Currently, short positions have a majority (66%), indicative of trader bias towards EUR/USD reversing directions and moving to lower ground.

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.