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By Kenny Fisher

EUR/USD remains under pressure in Wednesday trading. The pair is trading in the low-1.34 range in European trading on Wednesday. Taking a look at economic news, Wednesday has a light schedule. In the eurozone, Industrial Production slipped in October, declining by 0.5%. It's another quiet day in the U.S., with no major releases on the schedule.

The eurozone continues to be marked by weak economic growth and this one of the factors that precipitated the ECB's surprise rate cut last week. The manufacturing sector is one sore spot in the economy, as underscored by a weak eurozone Industrial Production release on Wednesday. The important indicator declined 0.5%, falling short of the estimate of -0.2%. It was the second decline in the past three readings. Earlier in the week, Italian Industrial Production posted a paltry gain of just 0.2%, matching the estimate. If eurozone growth remains sluggish, traders can expect the euro to remain under strong pressure from the U.S. dollar.

Germany released inflation data on Tuesday, and the numbers did not impress. Final CPI dropped 0.2%, its first decline since April. The index has not looked strong lately, posting two consecutive releases of 0.0%. There was no relief from German Wholesale Price Index, which posted a sharp decline of -1.0%, well off the estimate of 0.3%. It was the index's worst showing since June 2012. Weak eurozone inflation was a major factor in the ECB's rate cut last week, and the ECB could be forced to take further monetary steps if eurozone and German inflation numbers do not move towards the ECB's inflation target of 2%.

The Greek government has imposed sharp austerity measures to get its fiscal house in order, but stumbling blocks remain on what continues to be a very bumpy road to economic recovery. The troika has promised Greece another installment of aid worth 1 billion euros, but wants to see the country plug a 2 billlion euro hole in its 2014 budget. The Greek government has rejected tax hikes or cuts in wages or pensions, which will make it difficult to eliminate this deficit. The troika has already provided Greece with some 240 billion euros in aid since 2010 and is insisting that the government stay within its 2014 budget, and has threatened to suspend the next installment until Athens takes further steps to keep costs under control. We can expect the tug-of-war between the sides to continue for some time.

The surprise ECB rate cut and superb Non-Farm Payrolls are the latest setbacks for the struggling euro. The currency looked sharp just a couple of weeks ago, when it was trading above the 1.38 line. Since then, the euro has taken a sharp turn downwards, shedding over four cents against the U.S. dollar. With increasing talk of a Dectaper from the Federal Reserve, there is more room for the euro to fall.

EUR/USD for Wednesday, November 13, 2013

Forex Rate Graph 21/1/13

EUR/USD November 13 at 12:00 GMT

EUR/USD 1.3418 H: 1.3453 L: 1.3409

EUR/USD Technical

S3 S2 S1 R1 R2 R3
1.3265 1.3325 1.3410 1.3500 1.3585 1.3649

  • EUR/USD is under pressure on Wednesday trading. The pair has been losing ground since the Asian session.
  • EUR/USD is testing support at 1.3410 and this line will likely see more activity during the day. This is followed by a support level at 1.3325.
  • The pair is facing resistance at the round number of 1.3500. This is followed by a resistance line at 1.3585, which has held firm since late October.
  • Current range: 1.3410 to 1.3500

Further levels in both directions:

  • Below: 1.3410, 1.3325, 1.3265, 1.3149 and 1.3049
  • Above: 1.3500, 1.3585, 1.3649 and 1.3786

OANDA's Open Positions Ratio

EUR/USD ratio continues to point to gains in short positions, a trend we have seen all week. This is reflected in the pair's movement, as the euro has posted modest losses. A large majority of the open positions remain short, indicative of a trader bias towards the dollar continuing to post gains against the euro.

After taking a tumble last week, the euro remains steady, trading close to the 1.34 line. With no major releases on Wednesday from the US, the pair's slow activity this week could continue.

EUR/USD Fundamentals

  • 10:00 eurozone Industrial Production. Estimate -0.2%. Actual -0.5%.
  • 12:10 German Buba President Jens Weidmann Speaks.
  • 18:01 U.S. 10-year Bond Auction.
  • 19:00 U.S. Federal Budget Balance. Estimate -104.3 B.

*Key releases are highlighted in bold

*All release times are GMT

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Source: EUR/USD -Steady As Eurozone Manufacturing Numbers Dip