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Monday, November 10, 2014

EUR/USD – Limited Movement to Start off Week





EUR/USD is steady on Monday, as the pair trades just below the 1.25 line. It’s a very quiet day on the release front, with no US releases on the schedule. In the Eurozone, Italian Industrial Production declined 0.9%, while Eurozone Sentix Investor Confidence came in at -11.9 points.

It was a poor start for the Eurozone on Monday. Italian Industrial Production dropped 0.9%, its third decline in three releases. The markets had expected a gain of 0.2%. There was no relief from Eurozone Sentix Investor Confidence, which posted a third straight decline, as investor and analyst sentiment has slipped to very low levels.
Mario Draghi and his ECB colleagues haven’t had much to cheer about lately, with the Eurozone stuck with low growth, weak inflation and high unemployment. Draghi has lowered interest rates to the bone, but the cuts have not improved the economic situation. The ECB has decided to focus on its balance sheet and has issued long-term loans to banks and purchased covered bonds. The ECB will begin buying asset-backed purchases later this month, so we could see the wobbly euro lose more ground. However, these moves may not be enough and Draghi may be forced to borrow a page from the book of other central banks and commence quantitative easing, which is the purchase of government securities.
US Nonfarm Payrolls disappointed on Friday, as the key employment indicator slipped to 214 thousand, well short of the estimate of 235 thousand. On a brighter note, the Unemployment Rate slipped to 5.8%, its lowest level in six years. On Thursday, Unemployment Claims fell to 278 thousand. This was better than the estimate of 285 thousand and marked a three-week low.

EUR/USD for Monday, November 10, 2014
EUR/USD November 10  10:30 GMT
EUR/USD 1.2496 H: 1.2509 L: 1.2453
EUR/USD Technical
S1 S2 S1 R1 R2 R3
1.2143 1.2286 1.2407 1.2518 1.2688 1.2806

  • EUR/USD has edged higher in the Asian and European sessions.
  • 1.2407 is providing support. 1.2286 is next.
  • 1.2518 is a weak resistance line. Will the pair break through this line during the day? 1.2688 is stronger.
  • Current range: 1.2407 to 1.2518
Further levels in both directions:
  • Below: 1.2407, 1.2286, 1.2143, 1.2042 and 1.1875
  • Above: 1.2518, 1.2688, 1.2806 and 1.2905

OANDA’s Open Positions Ratio
EUR/USD ratio is pointing to gains in long positions in Monday. This is consistent with the pair’s movement, as the euro has post small gains. The ratio has a majority of long positions, indicative of trader bias towards the euro breaking out of range and moving higher.

EUR/USD Fundamentals
  • 9:00 Italian Industrial Production. Estimate +0.2%. Actual -0.9%.
  • 9:30 Eurozone Sentix Investor Confidence. Estimate -6.9 points. Actual -11.9 points.
*Key releases are highlighted in bold.

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