EUR/USD – Euro Subdued in Thin Holiday Trading

After posting slight gains last week, EUR/USD has started the New Year in quiet fashion. Currently, the pair is trading just above the 1.05 line. On the release front, US markets are closed for New Year’s, so there are no US events. In the Europe, German and Eurozone Manufacturing PMI reports both pointed to expansion. On Tuesday, Germany releases Preliminary CPI and Unemployment Change, while the US will publish the ISM Manufacturing PMI.

Trading was been generally uneventful in the final week of the year, but on Friday, the euro spiked upwards at the start of the Asian session, when markets are at their thinnest levels. The short-lived spike, known as a ‘flash crash’, saw the euro climb as high as 1.0652 before retracting. There was a similar occurrence with the British pound back in October, in which the currency briefly plunged some 10 percent before recovering.

The New Year started on a positive note, as manufacturing indicators point to expansion in the Eurozone manufacturing sector. German Manufacturing PMI improved to 55.6, edging above the forecast of 55.5. Eurozone Manufacturing PMI rose to 54.9, matching the forecast. What is particularly encouraging is that the indicator has now risen over four straight months, pointing to stronger growth in the fourth quarter. The Eurozone has been marked by slow but steady growth, as the bloc has managed to withstand this year’s political earthquakes, notably the British vote to leave the European Union and the stunning electoral victory of Donald Trump. GDP growth for 2016 is expected at 1.6%, while the forecast for both 2017 and 2018 stands at 1.5%.

EUR/USD Fundamentals

Monday (January 2)

  • 8:15 Spanish Manufacturing PMI. Estimate 54.6. Actual 55.3
  • 8:45 Italian Manufacturing PMI. Estimate 52.3. Actual 53.2
  • 8:50 French Final Manufacturing PMI. Estimate 53.5. Actual 53.5
  • 8:55 German Final Manufacturing PMI. Estimate 55.5. Actual 55.6
  • 9:00 Eurozone Final Manufacturing PMI. Estimate 54.9. Actual 54.9

Tuesday (January 3)

  • All Day – German Preliminary CPI
  • 8:55 German Unemployment Change. Estimate -5K
  • 15:00 US ISM Manufacturing PMI. Estimate 53.7

*All release times are GMT

* Key events are in bold

EUR/USD for Monday, January 2, 2017

EUR/USD January 2 at 11:05 GMT

Open: 1.0507 High: 1.0526 Low: 1.0506 Close: 1.0513

EUR/USD Technical

S1 S2 S1 R1 R2 R3
1.0287 1.0414 1.0506 1.0616 1.0708 1.0873
  • EUR/USD has shown little movement in the Asian and European sessions
  • 1.0506 is under strong pressure in support
  • 1.0616 is the next resistance line

Further levels in both directions:

  • Below: 1.0506, 1.0414 and 1.0287
  • Above: 1.0616, 1.0708 and 1.0873
  • Current range: 1.0506 to 1.0616

OANDA’s Open Positions Ratio

EUR/USD ratio is showing movement towards long positions. Currently,  long positions have a majority (56%), indicative of trader bias towards EUR/USD breaking out and moving upwards.

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

Market Analyst at OANDA
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, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.
Kenny Fisher

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