EUR/USD – Struggling Euro Dips Below 1.18

EUR/USD has started the new trading week with losses, as the pair has fallen below the 1.18 line in Monday’s European session. The euro has lost about 200 points in the past week, continuing a nasty slide. On the release front, it’s a very quiet start to the week. There are no Eurozone events and the sole data release out of the US is the Labor Conditions Market Index. As well, FOMC member Dennis Lockhart will deliver a speech in Atlanta.

Eurozone manufacturing data was less than impressive on Friday. German Industrial Production for November came in at -0.1%, well off the estimate of a 0.4% gain. In France, Industrial Production posted a second straight decline, coming in at -0.3%. The markets had expected a gain of 0.4%. Trade Balance numbers were a mix, as Germany’s trade surplus of EUR 17.7B was well off expectations, while France’s trade deficit narrowed to EUR -3.2 billion, stronger than expected.

US releases wrapped up the week in fine fashion, as employment data shined. Nonfarm Employment Change, one of the most important indicators, posted a gain of 252 thousand, easily beating the estimate of 241 thousand. The unemployment rate fell to 5.6%, edging below the forecast of 5.7%. Meanwhile, Average Earnings dropped 0.2%, its first decline since July 2013. A lack of wage pressure means that the Fed may be able to postpone a rate hike until the second half of 2015.

The Federal Reserve released the minutes of its previous meeting on Wednesday, with no surprises for the markets. There had been plenty of speculation that the insertion of the word “patience” in the previous policy statement signaled a more aggressive monetary stance. However, the minutes stated that Fed members remained of the view that Fed policy had not changed, and that a rate hike was unlikely before April. Although economic growth continues to improve, inflation remains at very low levels, which means that the economy is in no danger of overheating, so there is no immediate need for a rate increase.

EUR/USD for Monday, January 12, 2015

EUR/USD January 12 at 11:20 GMT

EUR/USD 1.1803 H: 1.1871 L: 1.1789

EUR/USD Technical

• EUR/USD was flat in the Asian session. The pair lost ground in the European session, testing support at 1.1802.
• 1.1802 is under strong pressure and could break during the day. 1.1734 is stronger.
• 1.1926 remains a strong resistance line.
• Current range: 1.1802 to 1.1926

Further levels in both directions:

• Below: 1.1802, 1.1734, 1.1634, 1.1525 and 1.1426
• Above: 1.1926, 1.2042, 1.2143 and 1.2286

OANDA’s Open Positions Ratio

EUR/USD is pointing to gains in long positions on Monday. This is not consistent with the pair’s movement, as the euro continues to post more losses. The ratio remains close to a split of long and short open positions, indicative of a lack of trader bias towards where the pair is headed next.

EUR/USD Fundamentals

• 15:00 US Labor Market Conditions Index.
• 17:40 US FOMC Member Dennis Lockhart Speaks.

*Key releases are highlighted in bold

*All release times are GMT

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