EUR/USD – Little Movement as Markets Await US Key Releases

EUR/USD is trading quietly on Friday, with the pair trading just below the 1.33 line in the European session. In economic news, US Unemployment Claims dropped sharply, but technical problems resulted in some claims not being processed. On Friday, the ECOFIN and Eurogroup are both holding two-day meetings. After just one major US release so far this week, the markets will be treated to four key events on Friday – Core Retail Sales, Retail Sales, PPI, and UoM Consumer Sentiment.

US Unemployment Claims pointed to a sharp decline for the August release. However, a Department of Labor spokesman said that the drop was due to computer upgrades in two states, which meant that not all claims were processed. Even so, unemployment claims are looking positive. The four-week average, which is a less volatile gauge of unemployment claims, dropped to 321,000, its lowest level since 2007. If employment data continues to improve, we could see the Fed pull the tapering trigger sooner rather than later.

On Thursday, Eurozone Industrial Production releases were very disappointing. Eurozone Industrial Production dropped from 0.7% in July to -1.5% in August, well off the estimate of -0.1%. This was the indicator’s sharpest drop since October 2012. Italian Industrial Production was almost as bad, declining -1.1% in August after a 0.3% gain in July. The markets had expected a gain of 0.3%. We could see the euro take a hit if manufacturing and industrial numbers don’t improve.

ECB head Mario Draghi travelled to Latvia on Thursday, where he spoke at the Bank of Latvia’s Economic Conference in Riga. The timing of the trip was not coincidental, as Latvia is set to join the Eurozone on January 1, 2014. The small country of under three million will be the 18th member of the Eurozone. Latvia’s economy has been doing well, but public support for adopting the euro has been weak, with fears of rising prices and Eurozone contagion. Draghi’s remarks are often a market-mover, and analysts will be closely monitoring his speech in Riga.

The Syrian crisis has taken on a new twist, as US military action, which seemed a foregone conclusion in late August, is currently on the backburner. The US and Russia are spearheading intensive efforts to come up with a diplomatic solution to the crisis. Under the proposed plan, Syria would hand over its entire arsenal of chemical weapons to the international community to be destroyed. Speaking on US television earlier in the week, President Obama said that he would delay any military action as long as a diplomatic solution was possible, but that a strike against Syria was still on the table. If the diplomatic efforts gain momentum and the crisis eases, we could see the safe-haven dollar lose ground.

EUR/USD for Friday, September 13, 2013

EUR/USD 1.3292 H: 1.3269 L: 1.3294

EUR/USD Technical

• EUR/USD continues to trading just below the 1.33 line in Friday trading. The pair touched a low of 1.3264 late in the Asian session but has moved higher.
• The pair is facing weak resistance at 1.33. The next line of resistance is at 1.3410.
• On the downside, 1.3162 continues to provide support. This line has strengthened as EUR/USD trades at higher levels. This is followed by a support level at 1.3100. This line has remained intact since mid-June.
• Current range: 1.3162 to 1.3300

Further levels in both directions:

• Below: 1.3162, 1.3100, 1.3050 and 1.3000
• Above: 1.3300, 1.3410, 1.3476, 1.3585 and 1.3649

OANDA’s Open Positions Ratio

EUR/USD ratio is unchanged in Friday trading. This is reflected in the current movement of the pair, which is showing very little movement. The ratio continues to have a solid majority of short positions, indicative of a strong trader bias towards the US dollar making gains at the expense of the euro.

EUR/USD has not showed much movement since Wednesday. However, we could see volatility during the day, as the US releases four key events on Friday.

EUR/USD Fundamentals

• 9:00 Eurozone Employment Change. Estimate -0.2%.
• Day 1 – ECOFIN Meetings.
• Day 1 – Eurogroup Meetings.
• 12:30 US Core Retail Sales. Estimate 0.3%.
• 12:30 US Retail Sales. Estimate 0.5%.
• 12:30 US PPI. Estimate 0.2%.
• 12:30 US Core PPI. Estimate 0.2%.
• 13:55 US Preliminary UoM Consumer Sentiment. Estimate 82.6 points.
• 13:55 US Preliminary UoM Inflation Expectations.
• 14:00 US Business Inventories. Estimate 0.4%.

*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.