EUR/USD June 11 – Under Pressure As Markets Eye Key

EUR/USD  is under pressure on Wednesday, as the pair trades in the low-1.35 range in the European session. The euro has  lost over  100 points so far  this week, as the pair  trades close to four-month lows. The dollar gained ground on Tuesday after a strong release from US JOLTS Job Openings. On the release calendar, there are no Eurozone releases. Today’s US highlight is Crude Oil Inventories.

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

• EUR/USD was quiet in the Asian session, trading around 1.3535. The pair is unchanged  in the European session.

Current range: 1.35 to 1.3550.

Further levels in both directions:

• 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

• 14:30 US Crude Oil Inventories. Estimate -1.3M.
• 17:01 US 10-year Bond Auction.
• 18:00 US Federal Budget Balance. Estimate -132.8B.

 

*All times are GMT

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

 

EUR/USD Sentiment

• 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.
• Draghi 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.