EUR/USD – Euro Slips to 14-Month Lows

EUR/USD is stable on Monday following sharp losses late last week. In the European session, the pair is trading in the mid-1.25 range. It’s a light day on the release front as we kick off the new week. In the Eurozone, German Factory Orders posted a sharp loss of 5.7%. Eurozone Retail PMI dipped to 44.4 points, while Eurozone Sentix Investor Confidence fell to -13.7 points, its lowest level since April 2013. There are no US releases on Monday.

It was a poor start to the week for Eurozone releases. German Factory Orders had an awful September, coming in at -5.7%. This was the indicator’s third decline in four releases. The indicator was well short of the estimate of -2.4%. Eurozone Retail PMI remains in contraction mode for a third straight month, with a reading of 44.4 points. There was no relief from the Eurozone Sentix Investor Confidence, which slipped to -13.7 points, its third straight drop. Not that the markets needed much reminding, but the weak readings underscore low growth levels and weak confidence in the Eurozone economy.

US employment data sparkled on Friday. Nonfarm Employment change rebounded in September, climbing to 248 thousand. This exceeded expectations of 216 thousand. The unemployment rate dipped to 5.9%, the first time it’s been below the 6% threshold in over six years. With QE slated to end later this month, the focus will shift to the timetable for an interest rake hike. Strong job numbers such as these could put pressure on the Fed to make an interest rate move sooner rather than later.

At its October policy meeting last week, the ECB made no changes to interest rates. The central bank did announce it would start buying covered bonds in October and begin asset-backed purchases (ABS) purchases in Q4. However, there were no specifics and no mention of any purchase of government bonds. This left the markets underwhelmed by the ECB announcement and the euro remains at low levels. Given that the ECB shows no signs of introducing a full-blown QE, it’s questionable whether ABS will help boost the anemic Eurozone economy.

EUR/USD for Monday, October 6, 2014

EUR/USD October 6 at 10:25 GMT

EUR/USD 1.2551 H: 1.2556 L: 1.2512

EUR/USD Technical

• EUR/USD is having a quiet Monday. The pair was flat in the Asian session and has edged higher in European trade.
• 1.2518 is an immediate support line and was tested earlier in the day.
• 1.2688 is a strong resistance line.
• Current range: 1.2518 to 1.2688

Further levels in both directions:

• Below: 1.2518, 1.2407, 1.2286 and 1.2144
• Above: 1.2688, 1.2806, 1.2905, 1.2984 and 1.3104

OANDA’s Open Positions Ratio

EUR/USD ratio is pointing to gains in long positions on Monday. This is not consistent with the pair’s movement, as the euro has posted small gains. The ratio has a majority of long positions, indicative of trader bias towards the euro continuing to move to higher ground.

GBP/USD Fundamentals

• 6:00 German Factory Orders. Estimate -2.4%. Actual -5.7%.
• 8:10 Eurozone Retail PMI. Estimate 44.8 points.
• 8:30 Eurozone Sentix Investor Confidence. Estimate -11.8 points. Actual -13.7 points.

* 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.