EUR/USD – Euro on Holding Pattern Ahead of Nonfarm Payrolls

EUR/USD is unchanged on Friday, following slight losses in the Thursday session. The pair is trading at 1.1140. On the release front, German Final Services came in at 55.2 points, within expectations. Eurozone Final Services posted a reading of 53.3, slightly above the estimate. Eurozone Retail Sales came in at 0.0%. It’s a busy day in the US, with three employment indicators on the schedule – Average Hourly Earnings, Unemployment Rate and Nonfarm Employment Change. The US will also publish ISM Non-Manufacturing PMI.

As expected, the ECB opted to remain on the sidelines at its policy meeting on Thursday. The ECB maintained its monetary policy, as the main lending rates remained at 0.00%, the deposit rate at -0.40%, and the asset-purchase program (QE) at 80 billion euros/month. Speaking after the ECB announcement, Mario Draghi reiterated that inflation was  likely to remain very low or in negative territory for some time. He stated that the ECB had revised its inflation forecast for 2016 to 0.2% from 0.1%. However, it has maintained its inflation forecasts for 2016 and 2107 at 1.3% and 1.6% respectively. Clearly, the Eurozone has a long way to go before even approaching the ECB’s inflation target of 2.0%. On a brighter note, growth has improved in the bloc, causing the ECB to raise its growth forecast for 2016 from 1.4% to 1.6%. There was no change to the forecasts for 2016 and 2017. Market reaction to the ECB was muted, as the euro reacted with only slight losses in the Thursday session.

US employment numbers are on center stage on Friday, highlighted by Nonfarm Employment Change. The forecast for the April report is 159 thousand, almost identical to the previous reading of 160 thousand. There were no surprises on Thursday, as ADP Nonfarm Payrolls came in at 173 thousand, very close to the forecast. Unemployment Claims were almost unchanged at 267 thousand, within expectations. The official upcoming Nonfarm Payrolls report, which is usually a market mover, will carry added importance, as it is the final Nonfarm Payrolls prior to the Fed policy meeting later in the month. Speculation has risen that the Fed will raise rates in next few months. A June rate hike is considered unlikely, but there is a stronger likelihood of a move in July or September.

EUR/USD Fundamentals

Friday (June 3)

• 7:15 Spanish Services PMI. Estimate 55.6. Actual 55.4
• 7:45 Italian Services PMI. Estimate 52.3. Actual 49.8
• 7:50 French Services PMI. Estimate 51.8. Actual 51.6
• 7:55 German Final Services PMI. Estimate 55.2. Actual 55.2
• 8:00 Eurozone Final Services PMI. Estimate 53.1. Actual 53.3
• 9:00 Eurozone Retail Sales. Estimate 0.4%
• 12:30 US Average Hourly Earnings. Estimate 0.2%
• 12:30 US Nonfarm Employment Change. Estimate 159K
• 12:30 US Unemployment Rate. Estimate 4.9%
• 12:30 US Trade Balance. Estimate -41.2B
• 13:45 US Final Services PMI. Estimate 51.2
• 14:00 US ISM Non-Manufacturing PMI. Estimate 55.4
• 14:00 US Factory Orders. Estimate 1.8%
• 16:30 US FOMC Member Lael Brainard Speaks

*Key events are in bold

*All release times are GMT

EUR/USD for Friday, June 3, 2016

EUR/USD June 3 at 9:20 GMT

Open: 1.1151 Low: 1.1141 High: 1.1159 Close: 1.1143

EUR/USD Technical

• EUR/US has been flat in the Asian and European sessions
• 1.1172 is a weak resistance line
• 1.1054 is a strong support level

Further levels in both directions:

• Below: 1.1054, 1.0909 and 1.0821
• Above: 1.1172, 1.1278, 1.1378 and 1.1495
• Current range: 1.1054 to 1.1172

OANDA’s Open Positions Ratio

EUR/USD ratio is showing little movement on Friday. Long and short positions are close to an even split, indicative of a lack of trader bias as to what direction EUR/USD 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.