EUR/USD – Euro Gains on Strong German, Eurozone Services Reports

The euro has posted gains in the Thursday session, erasing the losses seen on Wednesday. Currently, EUR/USD is trading at 1.2079, up 0.53% on the day. On the release front, German Final Services PMI improved to 55.8, matching the forecast. Eurozone Final Services PMI followed suit, climbing to 56.6, which edged above the estimate of 56.5 points. In the US, employment numbers were a mixed bag. The ADP Payrolls report jumped to 250 thousand, crushing the estimate of 191 thousand. However, unemployment claims rose to 250 thousand, higher than the forecast of 241 thousand. Friday will be busy, as the Germany releases retail sales, and the eurozone publishes CPI Flash Estimate. In the US, the focus remains on job data, with the release of Average Hourly Earnings and Nonfarm Payrolls.

The Federal Reserve minutes were positive in tone, but not overly hawkish. As a result, the US dollar remains under pressure as the euro has risen on Thursday. Policymakers noted that economic activity was expanding at a “solid pace”, buoyed by improved consumer and business spending, as well as a stronger global economy. FOMC members revised upwards their projection for GDP in 2018, from 2.1% to 2.5%. The minutes noted that new tax reform is expected to raise economic growth, but the Fed is unsure on the impact of the new law in areas such as the labor market. As for inflation, Fed officials remain concerned that inflation levels are well below the target of 2%, and this trend could continue.

German numbers continue to look sharp. Manufacturing and services PMIs gained ground in December, and inflation accelerated to 0.6%, edging above the forecast of 0.5%. The strong gain matched the February reading, equaling the strongest gain recorded in 2017. Unemployment rolls continue to fall, as the labor market continues to remain tight in a robust economy. The numbers are all the more impressive as the political landscape remains uncertain, following inconclusive elections in September. President Angela Merkel is now eyeing the Social Democrats as a coalition partner, but negotiations are moving at a slow pace.

EUR/USD Fundamentals

Thursday (January 4)

• 3:15 Spanish Services PMI. Estimate 54.7. Actual 54.6
• 3:45 Italian Services PMI. Estimate 54.7. Actual 55.4
• 3:50 French Final Services PMI. Estimate 59.4. Actual 59.1
• 3:55 German Final Services PMI. Estimate 55.8. Actual 55.8
• 4:00 Eurozone Final Services PMI. Estimate 56.5. Actual 56.6
• 4:51 Spanish 10-year Bond Auction. Actual 1.53%
• 5:01 French 10-year Bond Auction. Actual 0.79%
• 7:30 US Challenger Job Cuts. Actual -3.6%
• 8:15 US ADP Nonfarm Employment Change. Estimate 191K. Actual 250K
• 8:30 US Unemployment Claims. Estimate 241K. Actual 250K
• 9:45 US Final Services PMI. Estimate 52.4. Actual 53.7
• 10:30 US Natural Gas Storage. Estimate -221B
• 11:00 US Crude Oil Inventories. Estimate -5.2M

*All release times are GMT

*Key events are in bold

EUR/USD for Thursday, January 4, 2018

EUR/USD for January 4 at 10:50 EDT

Open: 1.2014 High: 1.2088 Low: 1.2000 Close: 1.2079

EUR/USD Technical

EUR/USD inched higher in the Asian session. The pair posted considerable gains in European trade and continues to head higher in the North American session

• 1.1961 has breathing room in support as EUR/USD as posted gains on Thursday
• 1.2092 is under pressure in resistance

Further levels in both directions:

• Below: 1.1961, 1.1876, 1.1777 and 1.1657
• Above: 1.2092, 1.2221 and 1.2357
• Current range: 1.1961 to 1.2092

OANDA’s Open Positions Ratio

EUR/USD ratio is unchanged in the Thursday session. Currently, short positions have a majority (67%), indicative of EUR/USD 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.