EUR/USD – Euro at 3-week Highs, US Jobless Claims, Services PMI Ahead

EUR/USD is showing limited movement in the Thursday session, following gains on Wednesday. Currently, the pair is trading at the 1.11 line. On the release front, Eurozone Employment Rate came in at 10 percent, matching the forecast. In the US, unemployment claims is expected to show little change, with an estimate of 257 thousand. Another key release, ISM Non-manufacturing PMI is expected to dip to 56.2 points. On Friday, the US will release key employment numbers, led by Nonfarm Employment Change. The indicator is expected to climb to 174 thousand.

The Federal Reserve left rates alone at Wednesday’s policy meeting, but sent out a slightly hawkish message with regard to a December hike. The Fed said that the economy has improved and the employment market remains strong. The Fed also noted that inflation was moving towards its target of 2 percent. Weak inflation has long been the Achilles heel of the US economy, but this obstacle to a rate hike appears to have been removed. The policy statement hinted strongly at a December hike, noting that “the case for an increase in the federal funds rate has continued to strengthen but decided, for the time being, to wait for some further evidence of continued progress toward its objectives”.  Two FOMC members voted to raise rates immediately, Fed Presidents Esther George and Loretta Mester. With a December hike currently priced at over 70 percent, market sentiment towards the US dollar should remain positive and we could see gains against the euro and other major currencies.

Eurozone inflation and GDP numbers were decent in October, lowering pressure on Mario Draghi & Co. to adopt further monetary easing measures. On Tuesday, Eurozone GDP and inflation releases matched their forecasts. Preliminary Flash GDP climbed 0.3% in the third quarter, unchanged from the previous quarter. This matched the estimate. The Eurozone economy has not been particularly strong, but on the positive side, the economy doesn’t appear to have lost ground due to the Brexit vote back in June. Still, the markets remain nervous about Brexit fallout, and negotiations between Britain and the EU are expected to be lengthy and arduous. Eurozone Flash Estimate CPI gained 0.5% in October, the highest gain we’ve since June 2014.

EUR/USD Fundamentals

Thursday (November 3)

• 8:00 Spanish Unemployment Change. Estimate 77.3K. Actual 44.7K
• 9:00 ECB Economic Bulletin
• 9:00 Italian Monthly Unemployment Rate. Estimate 11.4%. Actual 11.7%
• 10:00 Eurozone Unemployment Rate. Estimate 10.0%. Actual 10.0%
• Tentative – French 10-year Bond Auction
• 11:30 US Challenger Job Cuts
• 12:30 US Unemployment Claims. Estimate 257K
• 12:30 US Preliminary Nonfarm Productivity. Estimate 1.7%
• 12:30 US Preliminary Unit Labor Costs. Estimate 1.6%
• 13:45 US Final Services PMI. Estimate 54.8
• 14:00 US ISM Non-Manufacturing PMI. Estimate 56.2
• 14:00 US Factory Orders. Estimate 0.2%
• 14:30 US Natural Gas Storage. Estimate 55B

Friday (November 4)

• 12:30 US Average Hourly Earnings. Estimate 0.3%
• 12:30 US Nonfarm Employment Change. Estimate 174K
• 12:30 US Unemployment Rate. Estimate 4.9%

*All release times are EDT

* Key events are in bold

EUR/USD for Thursday, November 3, 2016

EUR/USD November 3 at 10:15 GMT

Open: 1.1094 High: 1.1126 Low: 1.1085 Close: 1.1098

EUR/USD Technical

• EUR/USD recorded slight gains in the Asian session but has retracted in European trade
• 1.1054 is providing support
• There is resistance at 1.1150

Further levels in both directions:

• Below: 1.1054, 1.0957, 1.0821 and 1.0708
• Above: 1.1150, 1.1278 and 1.1366
• Current range: 1.1054 to 1.1150

OANDA’s Open Positions Ratio

EUR/USD ratio continues to show movement towards short positions. Currently, short 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.