EUR/USD is trading in low ground after the blow it received from Draghi, which managed to push down the euro with strong rhetoric, but without action. The focus now shifts to the US with the all important Non-Farm Payrolls. Expectations are high. Will this lead to a disappointment and a recovery of the pair? Or will it set the next leg of the downfall?
Here is a quick update on the technical situation, indicators, and market sentiment that moves euro/dollar.
EUR/USD Technical
- EUR/USD suffered a “dead cat bounce” trade around 1.37 after the turbulent session beforehand.
Current range: 1.37 to 1.3740.
Further levels in both directions:
- Below: 1.37, 1.3650 and 1.3560, 1.3515 and 13450.
- Above: 1.3740,, 1.38, 1.3830, 1.3895, 1.3940, and 1.40
- 1.3650 comes into play on a big downfall.
- On the upside, 1.38 is now stronger after the failed recovery attempt.
EUR/USD Fundamentals
- 6:00 German Factory Orders. Exp. +0.5%. Actual +0.6%.
- 8:10 Euro-zone Retail PMI. Actual: 49.2 points.
- 12:30 US Non-Farm Payrolls. Exp. +200K. See how to trade the NFP with EUR/USD.
- 12:30 US unemployment rate. Exp. 6.6%.
*All times are GMT For more events and lines, see the Euro to dollar forecast.
EUR/USD Sentiment
- Draghi drags euro lower: While the ECB did not make policy changes, the accompanying statement and press conference by Draghi were dovish: QE and a negative rate are on the table and the exchange rate received a more prominent place in the statement. The result was a low euro. At what point will Draghi have to act? A lot depends on April’s inflation numbers.
- High NFP expectations: Winter has come to an end and there are high expectations for less distortions in employment figures and upbeat numbers. ADP and the employment component in the services PMI point upwards. But are expectations too high? We will know shortly. See how to trade the NFP with EUR/USD.
- German numbers point upwards: German data continues to look solid. retails sales posted a strong gain of 1.3%, February’s unemployment change continued to show improvement and also consumer confidence is on the rise. While also French PMIs are beginning to catch up, there is still a long way to go in the fragile EZ recovery.
- Yellen says US economy has long way to go: Fed chair Janet Yellen surprised the markets with a dovish outlook regarding the Fed’s monetary plans. She said that inflation and employment levels needed to improve considerably, and the Federal Reserve would continue to provide monetary stimulus for some time. Currently, the Fed is purchasing $55 billion in assets under its QE scheme. There have been three tapers to QE so far, and Yellen plans to wind up the program in the fall, provided that the US economy does not run into any serious turbulence. At the same time, the Federal Reserve has stated that it has no plans to raise interest rates until sometime in 2015. The taper pace and the rate hike pace depend a lot on jobs data.
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