EUR/USD – Little Movement as Euro Stays Close to 1.12 Line

EUR/USD is steady in North American trade on Tuesday, as the pair continues to trade slightly above the 1.12 level. It’s been a quiet day on the release front, with only a handful of releases on Wednesday. German Factory Orders registered a sharp decline, and the news wasn’t much better in the US, as Trade Balance posted a higher deficit than expected.

EUR/USD Fundamentals

Tuesday (Oct. 6)

• 6:00  German Factory Orders. Estimate  +0.5%. Actual -1.8%.

The markets received a nasty surprise as this important manufacturing indicator posted a sharp decline of 1.8%, well off  the estimate of 0.5%. The indicator has been struggling in recent readings, as the August reading marked the third decline in the past four months.

• 8:10  Eurozone Retail PMI. Actual 51.9 points.

This indicator tracks the changes in retail sales for the  Eurozone’s three largest economies combined (Germany, Italy and France). The indicator has been moving higher, and the reading of 51.4 points is indicative of slight expansion in the retail sector.

• 12:30  US Trade Balance. Estimate 47.6 billion. Actual $48.3 billion

Trade Balance is closely linked to currency demand, so it is closely monitored by the markets. The US trade deficit was expected to worsen in August, but the deficit was much higher than expected. This marked a 5-month high for the trade deficit, and will do little to allay the fears of investors who are nervous about a US slowdown.

• 14:00  US IBD/TIPP Economic Optimism. Estimate 44.6 points. Actual 47.3 points.

Although the US economy has looked strong in 2015, this consumer confidence indicator has struggled, spending most of the year below the 50-point level. Any reading below 50 is indicative of pessimism on the part of the US consumer. The October report was therefore a breath of fresh air, as the indicator easily beat the estimate.

Upcoming Events

Tuesday (Oct. 7) 

• 17:00 ECB President Mario Draghi Speaks.

Draghi is not expected to make any major announcements at an event in Frankfurt, but the markets are always listening closely when the head of the ECB is in front of a microphone, as any hints about future ECB monetary policy can have an immediate effect on the movement of EUR/USD.

21:30  US FOMC Member John Williams Speaks.

Williams will address an event in San Francisco. Comments made by Federal Reserve FOMC Members are closely watched by the markets, especially with so much speculation surrounding the timing of a rate hike by the Fed. Any hints regarding what action the Fed might take can thus have a significant impact on the movement of EUR/USD.

Wednesday (Oct. 7)

• 6:00 German Industrial Production. Estimate 0.3%.

This event usually does not have much impact on EUR/USD, but the situation could be different this time around, since this manufacturing indicator is coming on the heels of a dismal release from German Factory Orders. This indicator is expected to slip to 0.3% in August, down from 0.7% a month earlier. Another weak manufacturing reading out of Germany, the largest economy in the Eurozone, could put strong pressure on EUR/USD.

• 6:45 French Trade Balance. Estimate EUR -3.6 billion.

France’s trade deficit jumped to 3.3 billion in July. Although this was within expectations, the markets do not like rising deficits. With the trade deficit expected to rise to EUR 3.6 billion in August, a reading that is weaker than expected could hurt the euro.

• Tentative – German 10-year Bond Auction.

Bond yields do not usually have a major impact on currency movements, but analysts follow these releases, as they are useful in tracking investor confidence. The September yield came in at 1.69%, slightly higher than the yield a month earlier.

• 14:30 US Crude Oil Inventories. Estimate 2.4 million.

This weekly indicator jumped in the last reading, climbing to +4.0 million, compared to -1.9 million a week earlier. The markets are expecting a smaller gain in the upcoming reading, with an estimate of 2.4 million. A better-than-expected reading could give a boost to the US dollar.

• 17:01  US 10-year Bond Auction

Bond yields are considered minor events and are unlikely to impact on EUR/USD, but these figures are helpful for tracking investor confidence, which can have a significant effect on the pair’s movement. The September yield came in at 2.24%, up slightly from the August auction.

• 19:00 US Consumer Credit  Estimate $18.8 billion.

High levels of consumer credit often translates into increased consumer spending, a key driver of economic growth.  The indicator slipped to $19.1 billion in July, but this beat the estimate of 18.4 billion. The downward trend is expected to continue in the August release.

*Key releases are highlighted in bold

*All release times are GMT

EUR/USD for Tuesday, October 6, 2015

EUR/USD October 6  at 11:00 GMT

EUR/USD 1.1221 H: 1.1231 L: 1.1196

EUR/USD Technical

• EUR/USD was steady in the Asian session
• The pair broke above 1.1214 early in the European session, and this line has switched to a support role.
• 1.1296 is an immediate resistance line.
• Current range: 1.1214 to 1.1296

Further levels in both directions:

• Below: 1.1214, 1.1105, 1.1017 and 1.0928
• Above: 1.1296, 1.1392, 1.1470 and 1.1658

OANDA’s Open Positions Ratio

EUR/USD ratio is close to an even split between long and short positions, as traders remain undecided as to what direction the euro 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.