EUR/USD – Stable as PMIs Meet Expectations

The euro is flat on Monday, as EUR/USD trades in the low-1.13 range in the European session. On the release front, European PMIs met expectations. In the US, today’s highlight is ISM Manufacturing PMI. The markets are expecting the index to soften in the January report.

With the Greek election behind us, Greece and its international creditors must reach some accommodation over Greece’s EUR 320 billion bailout program. European Commission President Jean-Claude Juncker has offered an olive branch to Athens, saying he is willing to scrap the troika mission, which represents the European Commission, ECB and the IMF and governs the bailout. However, he ruled out writing off any part of Greece’s debt. The new Greek government has stated it wishes to remain in the Eurozone but does not want to accept more bailout funds under the present agreement. We can expect some tough negotiations in the upcoming weeks over the bailout.

US Advance GDP for Q4 disappointed, posting a gain of 2.6%. The markets had anticipated a gain of 3.0%. Still, market sentiment towards the US economy remains positive, underscored by the Federal Reserve statement last week, where the Fed noted solid growth in the economy. The Fed remains on track to raise rates later in 2015, and the dollar will likely benefit as speculation continues over the timing of a rate hike.

German Retail Sales posted a weak gain of 0.2%, marking a 3-month low. The estimate stood at 0.4%. Eurozone inflation numbers were a mix, as the Eurozone CPI came in at -0.6%, its second straight decline. However, Eurozone Core CPI posted a gain of 0.6%, matching the forecast. In Spain, CPI declined by 1.4%, although there was good news from GDP, which improved to 0.7% in Q4.

EUR/USD for Monday, February 2, 2015

EUR/USD February 2 at 11:45 GMT

EUR/USD 1.1329 H: 1.1354 L: 1.1292

EUR/USD Technical

• EUR/USD was uneventful in the Asian session. The pair posted gains in the European session and tested resistance at 1.1340, but has retracted.
• 1.1231 remains a strong support level.
• On the upside, 1.1340 is under pressure. Will the pair break through during the day? 1.1426 is stronger.
• Current range: 1.1231 to 1.1340

Further levels in both directions:

• Below: 1.1231, 1.1154, 1.1066 and 1.0906
• Above: 1.1340, 1.1426, 1.1525, 1.1634 and 1.1754

OANDA’s Open Positions Ratio

EUR/USD ratio has a majority of short positions, indicative of trader bias towards the euro moving lower.

EUR/USD Fundamentals

• 8:15 Spanish Manufacturing PMI. Estimate 54.2 points. Actual 54.7 points.
• 8:45 Italian Manufacturing PMI. Estimate 49.3 points. Actual 49.9 points.
• 9:00 Eurozone Final Manufacturing PMI. Estimate 51.0 points. Actual 51.0 points.
• 13:30 US Core PCE Price Index. Estimate 0.0%.
• 13:30 US Personal Spending. Estimate -0.1%.
• 13:30 US Personal Income. Estimate 0.2%.
• 14:45 US Final Manufacturing PMI. Estimate 54.1 points.
• 15:00 US ISM Manufacturing PMI. Estimate 54.9 points.
• 15:00 US Construction Spending. Estimate 0.9%.
• 15:00 US ISM Manufacturing Prices. Estimate 40.1 points.

*Key releases are highlighted in bold

*All release times are GMT

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