EUR/USD - Struggling Euro Slips To 9-Month Lows

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 |  Includes: FXE, UDN, UUP
by: Dean Popplewell

By Kenny Fisher

EUR/USD continues to lose ground on Wednesday, as the pair trades in the mid-1.33 range late in the European session. German manufacturing numbers were weak, as Factory Orders plunged 3.2%. Italian numbers were a mix, as GDP declined 0.2% while Industrial Production posted a strong gain of 0.9%.

German manufacturing data was a big disappointment on Wednesday, as Factory Orders fell by 3.2%. This was the strongest decline since October 2012. There are signs that the eurozone's largest economy is in trouble, which could have a chilling effect on the shaky euro. We'll get a look at further German manufacturing data on Thursday, with the release of Industrial Production.

US PMIs posted strong gains in July. On Tuesday, ISM Non-manufacturing PMI looked sharp, rising to 58.7 points last month. This easily beat the estimate of 56.6, and was the index’s best showing since February 2011. This follows an excellent Manufacturing PMI reading last week, with the index climbing to 57.1 points, a three-year high. There was more positive news on Tuesday, as Factory Orders had an impressive July, gaining 1.1%. These solid numbers point to healthy expansion in the US manufacturing and services sectors, which has helped the dollar gain ground at the euro's expense.

In Europe, Services PMIs painted a mixed picture on Tuesday. The Spanish PMI rose to 56.2 points, beating the estimate of 55.1. The Italian release dipped to 52.8, shy of the estimate of 53.2. Eurozone Final Services PMI improved last month, hitting 54.2, very close to the estimate of 54.4 points. All of the readings were above the 50-point level, which point to expansion in the services sectors. Elsewhere, eurozone retail sales, the primary gauge of consumer spending, rose to 0.4%, matching the forecast. This was a strong improvement from the flat 0.0% reading a month earlier.

EUR/USD for Wednesday, August 6, 2014

EUR/USD August 6 at 11:25 GMT

EUR/USD 1.3338 H: 1.3374 L: 1.3333

EUR/USD Technical

S3 S2 S1 R1 R2 R3
1.3104 1.3175 1.3295 1.3346 1.3487 1.3585
Click to enlarge
  • EUR/USD was flat in the Asian session. The pair has weakened in the European session, dropping below the 1.34 line.
  • 1.3295 is an immediate support level and could face strong pressure if the euro continues to weaken.
  • 1.3346 has reverted to a resistance role as the pair trades at lower levels. 1.3487 is stronger.
  • Current range: 1.3295 to 1.3346

Further levels in both directions:

  • Below: 1.3295, 1.3175, 1.3104 and 1.2967
  • Above: 1.3346, 1.3487, 1.3585 and 1.3651

OANDA's Open Positions Ratio

EUR/USD ratio is pointing to gains in long positions in Wednesday trade, continuing the direction seen a day earlier. This is not consistent with the movement displayed by the pair, as the euro continues to weaken. The ratio has a majority of long positions, indicative of trader bias towards the euro reversing directions and moving higher.

EUR/USD Fundamentals

  • 6:00 Eurozone German Factory Orders. Estimate +0.5%. Actual -3.2%.
  • 8:00 Italian Industrial Production. Estimate +0.9%. Actual +0.9%.
  • 8:10 Eurozone Retail PMI. Actual 47.6 points.
  • 9:00 Eurozone Italian Preliminary GDP. Estimate +0.1%. Actual -0.2%.
  • 12:30 US Trade Balance. Estimate -44.2B.
  • 14:30 US Crude Oil Inventories. Estimate -1.1M.

*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.