EUR/USD – Euro In Holding Pattern Ahead of US Nonfarm Payrolls

The euro is stable on Friday, as EUR/USD trades in the low-1.14 range. The currency has rallied in the past two weeks, posting gains of about 250 points. On the release front, German Industrial Production, a minor indicator, posted a weak gain of 0.1%. Today’s highlight is US Nonfarm Employment Change. The markets are expecting a weak report for January, with an estimate of 236 thousand.

In the US, this week’s employment readings have not impressed. ADP Non-Farm Employment Change was well off expectations, falling to 213 thousand. The estimate stood at 224 thousand. Unemployment Claims rose to 278 thousand last week, although this did beat the forecast of 287 thousand. If the official Nonfarm Employment Change does soften as is expected, the dollar could lose some ground to the euro.

The new Greek government has been talking tough about renegotiating its bailout agreement, much to the consternation of the troika and Germany. Greece has declared that it will not honor the current bailout agreement and has put a halt to the sale of major public assets to help pay back its debt. The ECB hit back on Wednesday, saying that it would no longer accept Greek government bonds as collateral for ECB loans. This will put pressure on Greek banks and serves as a warning that the ECB will not stand idly by as Greece tries to avoid its bailout obligations. The fireworks could continue next week, as German Chancellor Angela Merkel and Greek Prime Minister Alexis Tsipras attend an EU meeting in Brussels next week.

German Factory Orders impressed in December, jumping 4.2%, crushing the estimate of 1.4%. Earlier in the week, there was good news from European PMI reports, as Spanish, Italian and Eurozone Services PMIs all improved in January. All three readings were above the 50 level, indicative of expansion in the services sector. Meanwhile, Eurozone Retail Sales, the primary gauge of consumer spending, weakened to 0.3% in December, down from 0.6% a month earlier. The indicator managed to beat the forecast of -0.1%.

EUR/USD for Friday, February 6, 2015

EUR/USD February 6 at 9:10 GMT

EUR/USD 1.1456 H: 1.1474 L: 1.1440

EUR/USD Technical

• EUR/USD was flat in the Asian session. The pair has edged lower in European trade.
• 1.1426 remains a weak support level. 1.1340 is stronger.
• 1.1525 is an immediate resistance line.
• Current range: 1.1426 to 1.1525

Further levels in both directions:

• Below: 1.1426, 1.1340, 1.1231, 1.1154 and 1066
• Above: 1.1525, 1.1634, 1.1754 and 1.1871

OANDA’s Open Positions Ratio

EUR/USD ratio is pointing to gains in short positions on Friday, reversing the trend seen a day earlier. 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 euro moving lower.

EUR/USD Fundamentals

• 7:00 German Industrial Production. Estimate 0.4%. Actual 0.1%.
• 7:45 French Government Budget Balance.
• 7:45 French Trade Balance. Estimate -3.1B.
• 13:30 US Nonfarm Employment Change. Estimate 236K.
• 13:30 US Unemployment Rate. Estimate 5.6%.
• 13:30 US Average Hourly Earnings. Estimate 0.3%.
• 16:45 US FOMC Member Dennis Lockhart Speaks.
• 20:00 US Consumer Credit. Estimate 15.1B.

*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.