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EUR/USD  continues to point downward on Thursday, as the pair trades in the low-1.35 range in the European session. In the US, we’ll  get a look at the first key US events  of the week, with the release of Unemployment Claims, Core Retail Sales  and Retail Sales.  In the Eurozone, Industrial Production looked solid, posting a five-month high. Inflation indicators continue to struggle, as German WPI  and French CPI both missed their estimates.

Here is a quick update on what’s moving the pair.

  • EUR/USD  edged higher  in the  Asian session, touching a high of  1.3544. The pair has edged back down in the  European session.

Current range: 1.35 to 1.3550.

Further levels in both directions:    EURUSD Daily Forecast June 12

  • Below: 1.35, 1.3450 and 1.34
  • Above: 1.3550, 1.3585, 1.3650, 1.3677, 1.37, 1.3740, 1.3785, 1.3830, 1.3865 and  1.3905.
  • 1.35  remains a  weak  support  line.  1.3450 follows.  
  • 1.3550 is an immediate resistance line.  1.3585 is next.

 

EUR/USD Fundamentals

  • 6:00 German WPI. Estimate 0.3%, actual -0.1%.
  • 6:45 French CPI. Estimate 0.1%, actual 0.0%.
  • 8:00 ECB Monthly Bulletin.
  • 9:00 Eurozone Industrial Production. Estimate 0.5%.
  • 12:30 US Core Retail Sales. Estimate 0.4%.
  • 12:30 US Retail Sales. Estimate 0.5%.
  • 12:30 US Unemployment Claims. Estimate 306K.
  • 12:30 US Import Prices. Estimate 0.2%.
  • 14:00 US Business Inventories. Estimate 0.4%.
  • 14:30 US Natural Gas Storage. Estimate 111B.
  • 17:01 US 30-year Bond Auction.

*All times are GMT

For more events and lines, see the  Euro to dollar  forecast.

 

EUR/USD Sentiment

  • Eurozone manufacturing improves, inflation stays flat: The markets are keeping a close eye on Eurozone data following the ECB rate cuts last week. The central bank took action in an attempt to boost flagging growth and inflation levels. Industrial Production was a pleasant surprise, rising 0.8% in May, its best showing in 2014. This easily beat the  estimate of 0.5%. However, the news was not reassuring on the inflation front, as  data from major Eurozone members remains listless.  German WPI came in at -0.1%, short of the estimate of +0.3%. French CPI recorded a flat reading of 0.0% for the second consecutive month.
  • US employment report  jumps: There  was more good news on the US employment front, as JOLTS  Job Openings jumped to 4.46 million, up sharply from 4.01 million a month earlier. This  easily  beat the estimate of 4.04 million, and comes on the  heels of a positive Nonfarm Payrolls last week. We’ll  get a look at Unemployment Claims on Thursday, with the markets expecting a slight improvement  compared to the previous release.
  • ECB  finally presses trigger:  After  months of all talk and no action, the ECB finally  made a move last week. The central bank reduced the benchmark interest rate to a record low 0.15% (the markets wanted to see 0.10%)  and introduced  a negative deposit rate  for the first time. As well, there was  preparation for QE and no more SMP sterilization.  Still,  it’s  safe to say that the markets were underwhelmed by the ECB’s actions, with one analyst saying the ECB had fired a lot of small bullets rather than resorting to a bazooka.  If growth and inflation numbers in the Eurozone continue to struggle, the ECB will be under pressure to take  stronger action at the July policy meeting.
  • Euro lower on yield differential: The markets continue to digest the monetary moves taken by the ECB last week. Although the interest rate cuts were not drastic, they nonetheless represented firm action by the ECB,  and  Mario  Draghi has stated that more action could follow if deemed  necessary. Meanwhile, with the Federal Reserve  continuing to trim its QE program, there is a strong likelihood that US rates will move upwards in 2015.  Thus we have  a situation where  European and US yields are likely to move in opposite directions, which has resulted in the euro losing over 100 points this week.
  • Nonfarm Payrolls  beats estimate: In the US, employment numbers were solid late last week. Unemployment Claims and Nonfarm Payrolls, both key indicators, met market expectations and helped the dollar hold its own against the euro. Unemployment Claims came in at 312 thousand, slightly above the estimate of 309 thousand. Nonfarm Employment Change met modest expectations on Friday, adding 217 thousand new jobs. The estimate stood at 214 thousand. The Unemployment Rate stayed pegged at 6.3%, beating the estimate of 6.4%. Solid employment numbers add to the likelihood that the Federal Reserve will continue to trim its QE program, which it plans to wind up by the end of 2014.