EUR/USD – Steady after yen surge sends euro tumbling

EUR/USD has edged lower in the Thursday session. Currently, the pair is trading at 1.1347, up 0.03%. On the release front, there are no major U.S. events on the schedule. In the U.S., the focus will be on employment numbers for the remainder of the week. ADP nonfarm payrolls are expected to remain unchanged at 179 thousand, while unemployment claims are forecast to continue climbing, with an estimate of 220 thousand. On Friday, the eurozone releases CPI reports, while the U.S. will post nonfarm payrolls and wage growth. As well, ISM Manufacturing PMI is forecast to dip to 57.7 points.

The euro took a plunge on Wednesday, declining 1.0 percent. The catalyst for the sharp drop was a surge by the Japanese yen, as investors remain nervous about the global economy and flocked to the yen, which posted strong gains against the dollar, with other currencies such as the euro feeling the effect. The markets are thin on liquidity this week, and with Japanese banks closed for most of the week, the yen’s movement was even more pronounced. The dollar has traditionally been a safe-haven asset, but this role is being re-evaluated, with some analysts calling the yen the “safer safe-haven”. If investor jitters continue, the euro could resume its downward slide.

After four rate hikes in 2018, the Federal Reserve will be drastically easing up on raising rates in 2019. Just a few months ago, there was heady talk of three or four rate hikes in 2019, but the Fed made an abrupt U-turn, saying the “neutral rate range” had been reached. Analysts expect one rate hike in 2019, as this year’s hikes and the global trade war have lessened the pace of expansion in the U.S. economy. According to the CME Group, the likelihood that the Fed will stay on the sidelines in January and March stands at 98% and 93%, respectively. This dovish stance from the Fed could weigh on the dollar in the coming months.

Currencies in apparent flash crash as risk sours

U.S dollar moves exaggerated in twilight zone hand-over

New year, same old markets

Thursday (January 3)

• 4:00 Eurozone M3 Money Supply. Estimate 3.8%. Actual 3.7%
  
• 4:00 Eurozone Private Loans. Estimate 3.3%. Actual 3.3%
  
• 7:30 US Challenger Job Cuts
• 8:15 US ADP Non-Farm Employment Change. Estimate 179K
• 8:30 US Unemployment Claims. Estimate 220K
• 10:00 US ISM Manufacturing PMI. Estimate 57.7
• 10:00 US ISM Manufacturing Prices. Estimate 57.9
• All Day – US Total Vehicle Sales. Estimate 17.2M

Friday (January 4)

• 3:55 German Final Services PMI. Estimate 52.5
• 3:55 German Unemployment Change. Estimate -12K
• 4:00 Eurozone Final Services PMI. Estimate 51.4
• 5:00 Eurozone CPI Flash Estimate. Estimate 1.8%
• 5:00 Eurozone Core CPI Flash Estimate. Estimate 1.0%
• 5:00 Eurozone PPI. Estimate -0.2%
• 8:30 US Average Hourly Earnings. Estimate 0.3%
• 8:30 US Nonfarm Employment Change. Estimate 178K
• 8:30 US Unemployment Rate. Estimate 3.7%
• 10:15 US Fed Chair Powell Speaks

*All release times are EST

*Key events are in bold

EUR/USD for Thursday, January 3, 2019

EUR/USD for January 3 at 7:15 EST

Open: 1.1344 High: 1.1384 Low: 1.1309 Close: 1.1347

EUR/USD Technical

In the Asian session, EUR/USD edged lower but then reversed directions and moved upwards. The pair is showing limited movement in European trade

• 1.1300 is providing support
• 1.1434 is the next resistance line
• Current range: 1.1300 to 1.1434

Further levels in both directions:

• Below: 1.1300, 1.1212 and 1.1120
• Above: 1.1434, 1.1553, 1.1685 and 1.1803

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.