EUR/USD – Dollar Firm After Positive US Employment Report

EUR/USD has steadied but remains under pressure on Wednesday, as the pair trades in the low-1.35 range in the European session. The euro has lost over a cent this week, as the pair trades close to four-month lows. The dollar gained ground on Tuesday after a strong release from JOLTS Job Openings. On the Wednesday calendar, there are no Eurozone releases. Today’s US highlight is Crude Oil Inventories.

There was more good news on the US employment front, as JOLTS Job Openings jumped to 4.46 million, up sharply from 4.01 million a month earlier. This easily beat the estimate of 4.04 million, and comes on the heels of a positive Nonfarm Payrolls last week. We’ll get a look at Unemployment Claims on Thursday, with the markets expecting a slight improvement compared to the previous release.

The euro is under pressure as the markets continue to digest the interest cuts by the ECB last week. The ECB cut the benchmark rate to 0.15%, a record low, and became the first central bank to introduce negative deposit rates, a measure meant to encourage banks to increase their lending and combat the growing danger of deflation. At the same time, with the Federal Reserve continuing to trim its QE program, there is a strong likelihood that US rates will move upwards in 2015. Thus we have a situation where European and US yields are likely to move in opposite directions, and this has contributed to the euro’s troubles, as the currency has shed over a cent this week.

The ECB’s rate cuts last week are a belated response to weak growth and low inflation in the Eurozone, but the markets had expected more. The cut in the benchmark rate was not as deep as anticipated, and many market players were looking for an asset purchase program, such as the schemes adopted by the Federal Reserve and Bank of England. It’s safe to say that the markets were underwhelmed by the ECB’s actions, with one analyst saying the ECB had fired a lot of small bullets rather than resorting to a bazooka. If growth and inflation numbers in the Eurozone continue to struggle, the ECB will be under pressure to take more action next month.

EUR/USD for Wednesday, June 11, 2014

EUR/USD June 11 at 9:05 GMT

EUR/USD 1.3540 H: 1.3545 L: 1.3522

EUR/USD Technical

• EUR/USD is steady on Wednesday.
• 1.3487 is providing support. 1.3346 is stronger.
• 1.3585 is a weak resistance line. There is stronger resistance at 1.3649.
• Current range: 1.3487 to 1.3585

Further levels in both directions:

• Below: 1.3487, 1.3346, 1.3219 and 1.3102
• Above: 1.3585, 1.3649, 1.3786, 1.3893 and 1.4000

OANDA’s Open Positions Ratio

EUR/USD ratio is pointing to gains in long positions on Wednesday, continuing the trend which started the week. This is not consistent with the movement of the pair, as the euro is almost unchanged. The ratio continues to point to an increase in the percentage of long positions, indicative of trader bias towards the euro improving against the dollar.

EUR/USD is showing little movement on Wednesday. The pair is unchanged in the European session.

EUR/USD Fundamentals

• 14:30 US Crude Oil Inventories. Estimate -1.3M.
• 17:01 US 10-year Bond Auction.
• 18:00 US Federal Budget Balance. Estimate -132.8B.

*Key releases are highlighted in bold

*All release times are GMT

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