EUR/USD – Euro Slips Below 1.07 After Paris Attacks

EUR/USD is steady on Monday, as the pair trades at 1.0735 in the European session. The pair remains under pressure in the aftermath of the Paris attacks on the weekend. In economic news, Eurozone CPI readings met expectations. ECB President Mario Draghi is addressing an industrial conference on Monday, and will likely address the Paris attacks in his remarks. In the US, the sole event on the schedule is the Empire State Manufacturing Index, an important manufacturing indicator. The markets are expecting a reading of -5.3 points.

The terror attacks and bombings in Paris, which killed 132 people and injured another 350, have sent shock waves around the world and hurt market risk sentiment in the process. The euro briefly dipped below the 1.07 level in Monday’s Asian session, and the currency remains under pressure. The euro has been on a steep slide over the past month, losing some 800 points against the US dollar. The weekend attacks in the heart of one of Europe’s biggest financial centers could add to the currency’s recent woes.

ECB head Mario Draghi testified before an ECB monetary committee on Thursday, and his broad hint about further easing in December has put downward pressure on the euro. Draghi made note of weak inflation in the Eurozone and stated that the ECB would “reexamine the degree of monetary policy accommodation,” Does this mean that the ECB will increase stimulus in December? Even if the central bank doesn’t make a move next month, we’re likely to see the current easing program extended beyond September 2016. With the Federal Reserve contemplating a rate hike in December, monetary divergence has sharpened and will continue to weigh on the euro, which is struggling at low levels.

US numbers on Friday were a mix. Retail Sales and PPI both fell short of expectations. Retail Sales came in at 0.1%, while Core Retail Sales was only marginally better, with a small gain of 0.2%. PPI came in at -0.4%, as the manufacturing inflation indicator posted a second straight decline. There was better news on the consumer front, as U0M Consumer Sentiment improved to 93.1 points, beating the estimate of 91.3 points. On Tuesday, we’ll get a look at US CPI and Core CPI, the primary gauges of consumer inflation. These indicators could play a crucial factor of whether the Fed makes a move and raises rates next month. Strong CPI readings could win over Fed policymakers who are concerned about whether the economy is strong enough to withstand a rate hike. So traders should be prepared for volatility after the CPI releases.

EUR/USD Fundamentals

Monday (Nov. 16)

• 10:00 Eurozone Final CPI. Estimate 0.0%. Actual 0.1%
• 10:00 Eurozone Final Core CPI. Estimate 1.0%. Actual 1.1%
• 10:15  ECB President Mario Draghi Speaks
• 11:00 German Buba Monthly Report
• 13:30 US Empire State Manufacturing Index. Estimate -5.3 points

Upcoming Key Events

Tuesday (Nov. 17)

• 10:00 German ZEW Economic Sentiment. Estimate 6.7 points
• 13:30 US CPI. Estimate 0.2%
• 13:30 US Core CPI. Estimate 0.2%

*Key releases are highlighted in bold

*All release times are GMT

EUR/USD for Monday, November 16, 2015

EUR/USD November 16 at 11:30 GMT

EUR/USD 1.0734 H: 1.0758 L: 1.0700

EUR/USD Technical

• EUR/USD lost ground in the Asian session but recovered. The pair is showing some movement in both directions in the European session.
• 1.0847 is an immediate resistance line.
• On the downside, 1.0732 remains under strong pressure and could break during the day.
• Current range: 1.0732 to 1.0847

Further levels in both directions:

• Below: 1.0732, 1.0659 and 1.05
• Above: 1.0847, 1.0941, 1.1017 and 1.1105

OANDA’s Open Positions Ratio

EUR/USD ratio is unchanged, reflective of the lack of movement from the pair. The ratio is close to an evenly split between long and short positions. This indicates a lack of trader bias as to what direction the pair will take next.

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.