EUR/USD – Steady as Markets Eye German Economic Sentiment

EUR/USD is stable on Monday, as the pair trades slightly shy of the 1.34 level. There are no economic releases in the Eurozone or the US, so we could see a quiet day from the pair. Today’s sole event is a speech from FOMC member Stanley Fischer, who will speak at a conference in Stockholm. On Tuesday, we’ll get a look at the German and Eurozone ZEW Economic Sentiment releases. Traders should treat both of these events as market-movers, as an unexpected reading from either indicator could have a significant effect on the movement of EUR/USD.

German numbers continue to struggle, pointing to trouble in Eurozone’s largest economy. On Friday, the trade surplus narrowed to $16.2 billion, well off the estimate of $19.8 billion. This was the lowest level in three months. This follows weak manufacturing numbers, as Industrial Production and Factory Production missed expectations. The Bundesbank is blaming tensions with Russia and stronger EU sanctions against Moscow for the weak economic numbers, as Germany is Russia’s number one trading partner in Europe. With economic indicators pointing downward and confidence in the German economy ebbing, we could see a decline in German GDP in the second quarter, which could have a chilling effect on the shaky euro.

As expected, the ECB maintained interest rates at 0.15%. ECB head Mario Draghi didn’t add anything dramatic in his press conference, acknowledging that the Eurozone continues to grapple with weak growth and inflation levels. Draghi said that the ECB forecasts “moderate” improvement in growth and that interest rates will remain at current levels for the near future. On the inflation front, Draghi does not expect any improvement before 2015. With interest rates already at record lows, the ECB may be forced to resort to unconventional monetary tools if Eurozone numbers don’t improve.

US releases enjoyed a solid week, led by the ISM Non-Manufacturing PMI and Unemployment Claims. The PMI, which measures the strength of the services sector, climbed to 58.6 points, a ten-month high. Unemployment Claims dropped to 289 thousand, beating the estimate of 305 thousand. The four-week claims average, which is less volatile than the weekly count, dipped to 293,500, its lowest level since February 2006. The improving labor market points to a growing economy, and the dollar has gained broad strength thanks to solid economic data.

EUR/USD for Monday, August 11, 2014

EUR/USD August 11 at 9:35 GMT

EUR/USD 1.3385 H: 1.3409 L: 1.3383

EUR/USD Technical

• EUR/USD edged lower in the Asian session, dropping below the 1.34 line. The pair is steady in the European session.
• 1.3346 is an immediate support line. 1.3295 is stronger.
• 1.3487 is providing strong resistance.
• Current range: 1.3346 to 1.3487

Further levels in both directions:

• Below: 1.3346, 1.3295, 1.3175 and 1.3104
• Above: 1.3487, 1.3585, 1.3651 and 1.37

OANDA’s Open Positions Ratio

EUR/USD ratio is pointing to gains in short positions in Monday trade. This is consistent with the movement from the pair, as the euro has posted small losses. The ratio has a majority of long positions, indicative of trader bias towards the euro moving to higher ground.

EUR/USD Fundamentals

• 7:15 US Federal Reserve Governor Stanley Fischer Speaks.

*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.