EUR/USD has settled down in Friday trading after posting strong gains on Thursday. The pair is trading in the mid-1.36 range in Friday’s European session. As expected, the ECB maintained interest rates at 0.25%. Over in the US, unemployment claims dropped for the third straight week. There is only one Eurozone release on Friday, German Factory Orders. It’s a busy day in the US, with three key events – Non-Farm Payrolls, Unemployment Rate and UoM Consumer Sentiment.
Here is a quick update on the technical situation, indicators, and market sentiment that moves euro/dollar.
EUR/USD Technical
- EUR/USD showed little movement late in the Asian session, consolidating at 1.3659. The pair is unchanged in the European session.
- Current range: 1.3650 to 1.3710.
Further levels in both directions: 
- Below: 1.3650, 1.3570, 1.3500, 1.3440, 1.34, 1.3320, 1.3240, 1.3175, 1.31 and 1.3050.
- Above: 1.3710, 1.3800 and 1.3870.
- 1.3650 is providing weak support. 1.3570 is next.
- 1.3710 is the next line of resistance. The round number of 1.38 is stronger.
EUR/USD Fundamentals
- 7:45 French Government Budget Balance. Actual -86.0B.
- 7:45 French Trade Balance. Exp. -5.1B. Actual -4.7B.
- 11:00 German Factory Orders. Exp. -0.4%.
- 13:30 US Non-Farm Employment Change. Exp. 180K. See how to trade the NFP with EURUSD.
- 13:30 US Unemployment Rate. Exp. 7.2%.
- 13:30 US Average Hourly Earnings. Exp. 0.2%.
- 13:30 US Core PCE Price Index. Exp. 0.1%.
- 13:30 US Personal Spending. Exp. 0.3%.
- 13:30 US Personal Income. Exp. 0.3%.
- 14:55 US UoM Preliminary Consumer Sentiment. Exp. 76.2 points.
- 14:55 US UoM Preliminary Inflation Expectations.
- 20:00 US FOMC Member Charles Evans Speaks.
- 20:00 US Consumer Credit. Exp. 14.6B.
*All times are GMT
For more events and lines, see the Euro to dollar forecast.
EUR/USD Sentiment
- Euro gains as ECB maintains rate: As expected, the ECB did not make reduce interest rates, which remain at the record low of 0.25%. As well, the deposit rate remains at 0.0%. After the rate decision, ECB head Mario Draghi said that the Bank would continue its accommodative policy stance and that interest rates would remain at current or lower levels for some time. He noted that there had been some discussion at the policy meeting about lowering the deposit rate. There wasn’t much new as far as projected growth for the Eurozone, with Draghi saying that the ECB forecast for 2013 remains at -0.4%, with the 2014 raised slightly, to 1.1% growth from 1.0%. The euro improved sharply, gaining close to one cent on Thursday.
- Unemployment Claims Drop: US employment numbers continue to show improve, as Unemployment Claims dropped for the third consecutive week. The key indicator dropped from 316 to 298 thousand, easily beating the estimate of 328 thousand. There was further good news, as GDP shot up 3.6% in Q3. On Friday, we’ll get a look at Non-Farm Payrolls and the Unemployment Rate. If these indicators look solid, we could see the US dollar reverse direction and post gains against the euro.
- Eurozone inflation remains low: Weak inflation continues to hobble the Eurozone, despite a record low interest rate of 0.25%. On Thursday, the ECB reduced its forecast for inflation in 2014, from 1.3% to 1.1%. This is well below the ECB’s target of 2%, and the ECB may be forced to reduce the key interest rate or the deposit rate if inflation and growth remain sluggish.
- Services PMI paint mixed picture: Spanish Services PMI looked sharp this week, as the index climbed to 51.5 points, up from 49.6 the month before. This was the PMI’s highest level in over six years. Italian Services PMI took the opposite route, dropping to 47.2 points, compared to 50.5 in the previous reading. The Eurozone Final Services PMI remained steady, coming in at a healthy 51.6 points. PMI data is an important gauge of economic activity and can affect the movement of EUR/USD.
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