Euro edges lower at start of week

The euro is in negative territory at the start of the new trading week. EUR/USD is trading around 1.1320 in the European session.

Investment confidence up, unemployment down

The week kicked off with positive European events, although the euro was unable to gain any ground. Investor Confidence in the eurozone rose to 14.9 in January, up from 13.5 beforehand. It was a similar story for Germany, which also saw investor confidence improve. The eurozone unemployment rate dipped to 7.2% in December, down from 7.3% a month earlier. Unemployment has been steadily dropping over the past year, as the economy continues to improve despite the lockdowns and Covid-related restrictions. A year ago, eurozone unemployment stood at 8.3%, and the decline in unemployment should continue in the coming months, barring a major economic downturn due to Covid.

The week ended with a disappointing US nonfarm payroll report, with a gain of just 199 thousand. This was well off the consensus of around 425 thousand. EUR/USD posted gains of 0.55% on Friday, its best one-day showing in a month. Still, there was some positive employment news, as unemployment dropped from 4.2% to 3.9% and wage growth climbed 4.7% y/y, above the estimate of 4.2%. The mixed jobs report is unlikely to change the Fed’s lift-off date from mid-2022, although that could change based on inflation and strength of the economy.

What was unusual after the soft nonfarm payroll report was that although US Treasury yields rose, the dollar nonetheless retreated against the major currencies. The dollar index slipped to 95.74 on Friday, but has recovered on Monday to 95.93, right around its mid-range. The index has support at 95.50 and resistance at 96.50 – a break through one of these barriers would signal the US dollar’s next directional move.

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 EUR/USD Technical

  • EUR/USD has support at 1.1296. Below, there is support at 1.1231
  • There is resistance at 1.1402 and 1.1443

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 Investing.com, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.
Kenny Fisher

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