EUR/USD – Euro Posts Gains, Markets Eye ECB Minutes and US Jobless Claims

EUR/USD has posted slight gains on Thursday, as the pair trades at 1.0920 in the European session. It’s been a fairly quiet week for the pair, but that could change during the day, as the markets are anxiously awaiting two key events – the ECB minutes and US Unemployment Claims. Elsewhere, German WPI disappointed with a dismal reading of -0.8%.

The ECB balked at any monetary easing moves at its December meeting, shocking the markets which had expected some action, given statements by ECB head Mario Draghi that he would not hesitate to implement further easing to kick-start a stagnant Eurozone economy. When the ECB stood on the sidelines instead, the markets reacted quickly, and the euro gained some 300 points against the US dollar. The release on Thursday of the minutes of the December policy meeting is thus of keen interest and could be a market-mover. A Reuters report on Thursday morning that the ECB is skeptical about providing further stimulus has helped the euro post modest gains on Thursday.

The Federal Reserve raised interest rates in December for the first time in nine years, and hinted that this move was the first of a series in 2016. Not surprisingly, this has led to intense market speculation as to when the Fed might strike again. A rate hike in late January is not seen as likely, coming so soon after the December move. Many experts are forecasting another hike in March, contingent on a strong US economy. Although the economy is in good shape, one major area of concern is the inflation picture. Inflation levels have not kept up with other economic indicators and remain at low levels. The minutes of the December meeting indicated that some Fed members strongly considered voting against a rate hike due to weak inflation. Another concern is a lack of wage growth, despite a robust labor market. This was underscored by the last Average Hourly Earnings report, which came in at a flat 0.0% in December. The Fed will be carefully monitoring inflation and wage growth data before deciding to raise rates again early in 2016.

EUR/USD Fundamentals

Thursday (Jan. 14)

  • 2:00 German WPI. Estimate +0.1%. Actual -0.8%
  • 4:00 Italian Industrial Production. Estimate +0.3%. Actual -0.5%
  • Tentative – Spanish 10-year Bond
  • All Day – Eurogroup Meetings
  • 7:30 – ECB Monetary Meeting Accounts
  • 8:30 US Unemployment Claims. Estimate 275K
  • 8:30 US FOMC James Bullard Speaks
  • 8:30 US Import Prices. Estimate -1.4%
  • 10:30 US Natural Gas Storage. Estimate -152B
  • 13:01 US 30-year Bond Auction

Upcoming Key Events

Friday (Jan. 15)

  • 8:30 US Core Retail Sales. Estimate 0.2%
  • 8:30 US PPI. Estimate -0.2%
  • 8:30 US Retail Sales. Estimate -0.1%

*Key events are in bold

*All release times are EST

EUR/USD for Thursday, January 14, 2016

EUR/USD January 14 at 5:40 EST

Open: 1.0885 Low: 1.0854 High: 1.0937 Close: 1.0922

EUR/USD Technical

S1 S2 S1 R1 R2 R3
1.0659 1.0732 1.0847 1.0941 1.1087 1.1172
  • EUR/USD was uneventful in the Asian session and has posted gains in European trade
  • 1.0941 is the next line of resistance
  • 1.0847 remains busy and has switched to a support role. It is a weak line.
  • Current range: 1.0847 to 1.0941

Further levels in both directions:

  • Below: 1.0847, 1.0732, 1.0659 and 1.0537
  • Above: 1.0941, 1.1087 and 1.1172

OANDA’s Open Positions Ratio

EUR/USD ratio is unchanged on Thursday. Short positions command a strong majority (57%), indicative of trader bias towards the euro reversing directions and moving downwards.

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 and macroeconomic analysis, Kenny Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in major online financial publications including, Seeking Alpha and FXStreet. Kenny has been a MarketPulse contributor since 2012.