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: Â Â 
- 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.Â
- 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 EUR/USDEUR/USDEUR/USDEUR/USDEUR/USD.
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.
Â
