EUR/USD – Euro Slips to 4-Week Lows, Markets Await Fed Minutes

EUR/USD has posted small losses on Wednesday, continuing the trend which has marked the pair throughout the week. In the European session, the pair is trading at 1.0740. On the release front, it’s a busy day, which could result in some volatility from the pair. Eurozone and German Services PPI beat their estimates. Over in the US, there are a host of key events, highlighted by the FOMC Minutes and ADP Nonfarm Payrolls.

The euro continues its downward slide in the New Year, as EUR/USD has lost over 200 points since December 31st. The pair is trading at its lowest levels since December 3, the date on which the euro posted huge gains following the ECB policy meeting which saw the ECB balk at any significant monetary moves. Eurozone CPI posted a weak gain of 0.2% in December, as inflation levels remain very weak in the bloc. There was some good news on Wednesday, as Services PMIs out of Germany and the Eurozone both beat expectations, with both indicators pointing to expansion in the services sector.

The Federal Reserve will release the minutes of the momentous December policy meeting, at which the Fed opted to raise interest rates for the first time in over nine years, by 0.25 percent. The Fed has hinted that the December move will kick-off a series of incremental hikes in 2016, and the markets will be looking for confirmation, or at least a hint that this is the Fed’s monetary strategy. We’ll also get a look at employment data, with the release of the ADP Nonfarm Payrolls, which precedes the official Nonfarm Payroll report later in the week. As well, the US will release the ISM Non-Manufacturing PMI and Trade Balance. The markets will thus have plenty of data to sift through later today, and traders should be prepared for volatility from EUR/USD.

EUR/USD Fundamentals

Wednesday (Jan. 6)

• 8:15 Spanish Services PMI. Estimate 56.9 points. Actual 55.1 points
• 8:45 Italian Services PMI. Estimate 53.8 points. Actual 55.3 points
• 8:50 French Final Services PMI. Estimate 50.0 points. Actual 49.8 points
• 8:55 German Final Services PMI. Estimate 55.4 points. Actual 56.0 points
• 9:00 Eurozone Final Services PMI. Estimate 53.9 points. Actual 54.2 points
• 10:00 Eurozone PPI. Estimate -0.2%
• 13:15 US ADP Non-Farm Employment Change. Estimate 193K
• 13:30 US Trade Balance. Estimate -44.0B
• 14:45 US Final Services PMI. Estimate 55.1 points
• 15:00 US ISM Non-Manufacturing PMI. Estimate 56.0 points
• 15:00 US Factory Orders. Estimate -0.2%
• 15:30 US Crude Oil Inventories. Estimate 0.7M
• 19:00 US FOMC Meeting Minutes

*Key Events are in bold

*All release times are GMT

EUR/USD for Wednesday, January 6, 2016

EUR/USD January 6 at 10:00 GMT

EUR/USD 1.0736  H: 1.0772 L: 1.0719

EUR/USD Technical

• The pair has been uneventful in the Asian and North American sessions.
• 1.0732 is a weak support level was tested earlier
• There is resistance at 1.0847
• Current range: 1.0732 to 1.0847

Further levels in both directions:

• Below: 1.0732, 1.0659 and 1.0537
• Above: 1.0847, 1.0941, 1.1087 and 1.1172

OANDA’s Open Positions Ratio

In the EUR/USD, short positions command a strong majority (56%), indicative of trader bias towards the euro continuing to move downwards.

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.