EUR/USD Dec. 4 – Under pressure ahead of all important

EUR/USD is trading just above 1.23 after dipping below this round level earlier. Markets are getting jittery ahead of the ECB meeting. Will Draghi announce QE? What is the level in which it is priced in? While the focus is on Europe, we have a stronger dollar across the board towards the NFP, and we have more data coming up. 

More: ECB Preview: A big step towards QE? 3 scenarios

Here’s a quick update on technicals, fundamentals and sentiment moving the pair.

• Asian session: The pair continued its fall below 1.24 and hit a new low of 1.2361, just above the 2014 lows of 1.2358.
• Current range: 1.2360 to 1.2440.

Further levels in both directions:

• Below: 1.2250, 1.2140, 1.2042 and 1.1876.
• Above: 1.2360, 1.2440, 1.25, and 1.2570
• 1.2360 is now resistance after the breakdown.
• The next support line is 1.2250 and the 2012 low of 1.2040 is not too far.

EUR/USD Fundamentals

• 9:10 Euro-zone Retail PMI. Actual: 48.9 points.
• 12:30 Challenger Job Cuts.
• 12:45 ECB rate decision. No change expected. 
• 13:30 Mario Draghi meets the press. ECB Preview: A big step towards QE? 3 scenarios
• 12:30 US Unemployment Claims. Exp. 296K.
• 13:30 US FOMC Loretta Mester talks.
• 17:30 US FOMC Lael Brainard talks.

* All times are GMT.

For more events and lines, see the EUR/USD.

EUR/USD Sentiment

• QE or not QE?: This is the question facing markets as Draghi takes the stage for the first time in the new ECB headquarters for the last meeting of the year. There are quite a few reasons to believe he will condition QE not on forecasts, which are expected to drop, but on the results of the second TLTRO released next week – a question of timing rather than substance. Here is the full preview: ECB Preview: A big step towards QE? 3 scenarios
• Dollar domination: The US dollar made a comeback, amid comments from FOMC member Stanley Fischer that expects wage hikes in the US. Richard Fisher, another FOMC member with almost the same name also had bullish comments to offer: that rate hikes are coming sooner than markets expect.
• Non-Farm Payrolls buildup: The first hint towards the NFP was positive: ISM manufacturing PMI beat expectations. ADP disappointed with only 208K jobs, slightly below predictions. Also the employment component of the ISM Non-Manufacturing PMI ticked down, but still remained high and also the headline figure was promising. All in all, expectations are probably consistent with the original projections of 225K.
• Even weaker inflation: The fall in oil prices and a relatively stable euro during October resulted in a very weak German inflation figure of 0.5% in HICP. Also Spanish inflation fell short. This means that EZ CPI, which is currently at the lowest levels in years, could fall even closer to zero. Adding the OPEC decision not to cut and the resulting extension of falling oil prices, at least headline inflation is set to fall even further.

In our latest podcast, we preview December’s big events, talk about the importance of jobless claims, the crash in oil prices and GOFO going negative:

Download it directly here.

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