EUR/USD: Steady in Light Trade

EUR/USD has edged higher on Friday, as the pair trades in the low-1.36 range in the European session. There are no major releases as we wrap up the trading week. In the Eurozone, German Final CPI improved last month, but German WPI posted a second straight decline. Friday’s sole release out of the US is Federal Budget Balance, a minor event.

In the US, Unemployment Claims dropped, as employment data continues to impress. The key indicator dropped to 304 thousand, well below the estimate of 316 thousand. Employment numbers for June have looked sharp, led by a jump in Nonfarm Payrolls and a drop in the unemployment rate.  The strong employment numbers have increased speculation about an interest rate hike by the Federal Reserve, and remarks by Fed policymakers will be under the market microscope.

The Federal Reserve minutes did not shed much light on when the Fed plans to raise interest rates, but policymakers did agree to wind up the QE scheme by October. The asset purchase program flooded the economy with over $2 trillion, and the Fed has been steadily reducing the program since last December. Winding down QE will require several more tapers by the Fed, but that shouldn’t pose a problem, given the solid employment data the economy has been churning out.

The ECB cut interest rates in June, hoping to inject some life into growth and inflation levels. So far, the results have been less than impressive. This week’s manufacturing numbers from Germany, Italy and France were dismal, with all three posting sharp declines. Inflation numbers have also remained weak. French CPI posted a flat reading of 0.3%, missing the estimate of 0.2%. In Germany, Final CPI came in at 0.3%, matching the forecast. German WPI slipped by 0.1%, its second straight decline. A strong euro has not helped matters, as it makes European exports more expensive and weighs on growth. If the trend of weak figures continues, the ECB will face more pressure to take action at its next policy meeting.

EUR/USD for Friday, July 11, 2014

EUR/USD July 11 at 9:05 GMT

EUR/USD 1.3612 H: 1.3624 L: 1.3596

EUR/USD Technical

• EUR/USD has been uneventful in the Asian and European sessions, staying close to the 1.36 line.
• 1.3585 is a weak support level. 1.3487 is stronger.
• On the upside, 1.3651 is the next resistance line. 1.3786 is next.
• Current range: 1.3585 to 1.3651

Further levels in both directions:

• Below: 1.3585, 1.3487, 1.3346 and 1.3295
• Above: 1.3651, 1.3786, 1.3893 and 1.40

OANDA’s Open Positions Ratio

EUR/USD ratio is pointing to gains in long positions on Friday, reversing the trend which has marked most of the week. This is consistent with the movement of the pair, as the euro has posted small losses. The ratio has a majority of short positions, indicative of trader bias towards the dollar posting gains against the euro.

EUR/USD Fundamentals

• 6:00 German Final CPI. Estimate 0.3%. Actual 0.3%.
• 6:00 German WPI. Estimate +0.2%. Actual -0.1%.
• 18:00 US Federal Budget Balance. Estimate 79.5B.

*Key releases are highlighted in bold

*All release times are GMT

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.