EUR/USD – Euro Under Pressure, Markets Await US Retail Sales

EUR/USD is showing little movement on Monday, following losses in the Friday session. The pair is trading at 1.1260. It’s a very quiet start to the week, with no economic events in the Eurozone or the US. Jens Weidmann, president of the German Central Bank, will deliver remarks at an event in Frankfurt. On Tuesday, the US will release retail sales reports.

The April Nonfarm Payrolls report, which posted a weak gain of just 38 thousand, sent the US dollar tumbling and raised concerns about the strength of the US labor market. However, these concerns should be laid to rest after key job numbers last week were solid and beat expectations. On Wednesday, JOLTS Job Openings improved to 5.79 million, easily beating the forecast of 5.67 million. Unemployment Claims followed suit with a strong reading. The indicator dropped to 264 thousand, compared to an estimate of 269 thousand. Significantly, this marked the lowest jobless report in six weeks. With the Federal Reserve mulling over a rate hike in the next few months, employment numbers will be especially significant, and any unexpected reading could result in volatility in the currency markets.

ECB President Mario Draghi often puts a positive spin on the Eurozone’s trouble, but he didn’t mince words on Thursday at the Brussels Economic Forum. Draghi said that years of poor growth had hurt the bloc’s productivity and warned that urgent action was needed in order to prevent the economy suffering permanent damage. Draghi said that monetary policy was not enough and structural reform was urgently needed. The ECB head has often noted that the central bank cannot fix the Eurozone economy solely with monetary policy and governments must cooperate and implement structural reform. Although growth has improved slightly in the first quarter, deflation remains a serious concern, as inflation levels have failed to respond to aggressive action by the ECB, which earlier in the year lowered the benchmark rate to 0.00% and increased the QE program to EUR 80 billion/mth.  Last week, the ECB implemented a corporate sector asset purchasing program, aimed at bolstering inflation. Analysts expect the ECB to buy between between €5 billion and €10 billion each month in corporate debt. Yields on European corporate bonds have tumbled in response, and this has pushed the euro lower.

EUR/USD Fundamentals

Monday (June 13)

• 7:00 German Buba President Jens Weidmann Speaks

Upcoming Key Events

Tuesday (June 14)

• 8:30 US Core Retail Sales. Estimate 0.4%
• 8:30 US Retail Sales. Estimate 0.4%

* Key releases are in bold

*All release times are GMT

EUR/USD for Monday, June 13, 2016

EUR/USD June 13 at 8:25 GMT

Open: 1.1238 Low: 1.1275 High: 1.1232 Close: 1.1268

EUR/USD Technical

• EUR/US has posted small gains in the Asian and European sessions
• 1.1278 is fluid and is a weak resistance line. It could see further action in the Monday session
• 1.1150 is a strong support level

Further levels in both directions:

• Below: 1.1150, 1.1054 and 1.0909
• Above: 1.1278, 1.1376, 1.1495 and 1.1638
• Current range: 1.1150 to 1.1278

OANDA’s Open Positions Ratio

EUR/USD ratio has shown movement towards short positions. Short positions have a slight majority (54%), indicative of slight trader bias towards EUR/USD reversing directions and moving lower.

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