EUR/USD – Euro Subdued on Mixed German Numbers

The euro is showing little movement in the Monday session. Currently, EUR/USD is trading at 1.1604, down 0.03% on the day. On the release front, German Factory Orders gained 1.0%, above the estimate of -1.0%. German Services PMI slowed to 54.7, short of the estimate of 55.5 points. Eurozone Services PMI also softened, but the reading of 55.0 was just above the estimate of 54.9 points. As well, eurozone investor confidence and inflation reports beat the forecasts. There are no major events in the US. On Tuesday, ECB President Mario Draghi speaks at an ECB forum in Frankfurt, and Fed Chair Janet Yellen will deliver remarks at an event in Washington.

The euro posted gains on Friday, as US employment numbers disappointed the markets. After a decline in September, a result of the hurricanes which battered the US, nonfarm payrolls rebounded sharply with a reading of 261 thousand. This was a respectable number, but still fell short of the forecast of 312 thousand. Wage growth also disappointed, slowing to 0.0%, short of the estimate of 0.2%. This marked the first time in 2017 that wage growth did not increase, underlining persistent weak inflation. Although Fed Chair Yellen and other Fed policymakers have expressed confidence that inflation levels will rise, this is still yet to occur, despite strong growth and a labor market at capacity.

The guessing game is over at the Federal Reserve, as President Trump nominated Federal Reserve Governor Jerome Powell on Thursday to head the Federal Reserve. Powell will take over in February 2018, when Yellen’s term expires. The new chair is expected to hold the course with monetary policy, which has been marked by incremental and small rate hikes since December 2015. It’s all but a given that the Fed will raise interest rates in December, but the forecast for 2018 is less clear. If the US economy continues to grow at current levels, we could see up to three rate hikes next year. Powell will also be tasked with continuing to trim the Fed’s huge balance sheet of $4.2 billion. Last month, the Fed has started trimming the balance sheet by $10 billion/mth, but these cuts are expected to increase in size next year.

EUR/USD Fundamentals

Monday (November 6)

• 2:00 German Factory Orders. Estimate -1.0% Actual +1.0%
• 3:15 Spanish Services PMI. Estimate 55.7. Actual 54.6
• 3:45 Italian Services PMI. Estimate 53.1. Actual 52.1
• 3:50 French Final Services PMI. Estimate 57.4. Actual 57.3
• 3:55 German Final Services PMI. Estimate 55.2. Actual 54.7
• 4:00 Eurozone Final Services PMI. Estimate 54.9. Actual 55.0
• 4:30 Eurozone Sentix Investor Confidence. Estimate 31.2
• 5:00 Eurozone PPI. Estimate 0.4%. Actual 0.6%
• All Day – Eurogroup Meetings
• 12:10 US FOMC Member William Dudley Speaks
• Tentative – US Loan Officer Survey

Tuesday (November 7)

• 4:00 ECB President Mario Draghi Speaks
• 14:30 US Federal Chair Janet Yellen Speaks

*All release times are GMT

*Key events are in bold

EUR/USD for Monday, November 6, 2017

EUR/USD for November 6 at 5:10 EDT

Open: 1.1614 High: 1.1624 Low: 1.1596 Close: 1.1604

EUR/USD Technical

EUR/USD was flat in the Asian session but and has ticked lower in European trade

• 1.1574 is providing support
• 1.1657 is the next resistance line

Further levels in both directions:

• Below: 1.1574, 1.1489 and 1.1366
• Above: 1.1657, 1.1777, 1.1876 and 1.1996
• Current range: 1.1574 to 1.1657

OANDA’s Open Positions Ratio

EUR/USD is showing little movement in the Monday session. Currently, short positions have a majority (62%), indicative of EUR/USD reversing directions 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.