Yesterday’s trade saw EUR/USD within the range of 1.1800-1.1899. The daily low has also been the lowest level since December 30th 2005. The pair closed at 1.1840, losing 0.41% on a daily basis.
At 7:47 GMT today EUR/USD was down 0.22% for the day to trade at 1.1813. The pair broke the first two key weekly support levels and touched a daily low at 1.1804 at 7:05 GMT.
Fundamentals
Euro zone
Retail Sales
Annualized retail sales in the Euro region as a whole probably rose 0.2% in November, according to the median forecast by experts, after in October sales climbed at a pace of 1.4%. If so, this would be the 12th consecutive period of growth. In monthly terms, retail sales probably increased 0.1% during November, following a 0.4% gain in October. This is a short-term indicator, which provides key information about consumer spending trend on a national scale. In case the index of retail sales rose at a faster-than-projected pace, this would have a bullish effect on the euro. Eurostat is expected to publish the official data at 10:00 GMT.
Economic Sentiment Indicator (ESI)
The final value of the consumer confidence index probably confirmed the preliminary reading of -10.9 in December, which was reported on December 22nd. If so, this would be the highest level of confidence since August, when the indicator stood at -10.0. The final index reading for November came in at -11.6, confirming the preliminary estimate. The indicator measures consumer confidence on a scale of -100 to +100. A reading of -100 suggests a lack of confidence, zero means neutrality and a reading of +100 indicates extreme levels of confidence. The index reflects the level of optimism, which consumers have about economic development in the region. The Business and Consumer Survey is conducted by phone and includes 23 000 households in the Euro zone. The questions asked stress on current economic and financial situation, savings intention and also on expected developments regarding consumer price indexes, general economic situation and major purchases of durable goods. This indicator is one of the five major components, that comprise the Economic Sentiment Indicator (ESI).
The ESI probably improved to 101.2 in December, according to expectations, from a reading of 100.8 in November. The Economic Sentiment Indicator (ESI) is a composite indicator, consisting of five sectoral confidence indicators with different weights: Industrial confidence indicator, Services confidence indicator, Consumer confidence indicator, Construction confidence indicator and Retail trade confidence indicator. The ESI is calculated as an index with mean value of 100.0 and standard deviation of 10 over a fixed standardised sample period.
Higher confidence usually implies greater willingness to spend, including large-ticket purchases, while consumer spending is a key factor behind economic growth. Therefore, in case the ESI climbed more than anticipated, this would cause a certain bullish impact on the euro. The European Commission is expected to release the official ESI reading at 10:00 GMT.
Euro slide
The common currency plunged to lows unseen since December 2005 on Thursday, after the annual harmonized consumer inflation was registered at -0.2% in December, or the lowest level since September 2009. The median forecast of experts pointed to a lesser annual drop in consumer prices, 0.1%. The slide has also been fueled by political outlook in Greece, as the country is set for elections during the current month, which may see the victory of a party opposed to austerity policy.
United States
Initial, Continuing Jobless Claims
The number of people in the United States, who filed for unemployment assistance for the first time during the week ended on January 2nd, probably decreased to 290 000 from 298 000 in the prior week. The latter has been the highest number of claims since the week ended on November 21st,. The 4-week moving average, an indicator lacking seasonal effects, was 290 750, marking an increase of 250 from the previous weeks revised average. The prior weeks average was revised up by 250 from 290 250 to 290 500.
Initial jobless claims number is a short-term indicator, reflecting lay-offs in the country. In case the number of claims fell more than projected, this would have a bullish effect on the greenback.
The number of continuing jobless claims probably increased to the seasonally adjusted 2 370 000 during the week ended on December 26th, from 2 353 000 in the previous week. The latter was a decrease by 53 000 compared to the revised up number of claims, reported during the week ended on December 12th. This indicator represents the actual number of people unemployed and currently receiving unemployment benefits, who filed for unemployment assistance at least two weeks ago.
The Department of Labor is to release the weekly report at 13:30 GMT.
Inflation concerns
Federal Reserve policy makers expressed concerns that consumer inflation in the US may remain below the banks inflation objective, due to the sharp drop in prices of oil and the strong dollar.
“With regard to inflation, a number of participants saw a risk that it could run persistently below their 2 percent objective, with some expressing concern that such an outcome could undermine the credibility of the Committee’s commitment to that objective,” according to the record, released yesterday.
“There is more concern over the inflation situation, and that’s going to frame the debate for the coming weeks,” said Thomas Costerg, an economist at Standard Chartered Bank in New York, cited by Bloomberg.
The minutes of the Federal Open Market Committee’s most recent meeting on policy (December 16th-17th) revealed that the Committee agreed the economy was likely to keep improving, which would result in further job gains.
The minutes also confirmed Fed Chair Yellen’s statement at the press conference in December, that the central banks new policy guidance implies a rate hike was not likely before the policy meeting in April.
Pivot Points
According to Binary Tribune’s daily analysis, the central pivot point for the pair is at 1.1846. In case EUR/USD manages to breach the first resistance level at 1.1893, it will probably continue up to test 1.1945. In case the second key resistance is broken, the pair will probably attempt to advance to 1.1992.
If EUR/USD manages to breach the first key support at 1.1794, it will probably continue to slide and test 1.1747. With this second key support broken, the movement to the downside will probably continue to 1.1695.
The mid-Pivot levels for today are as follows: M1 – 1.1721, M2 – 1.1771, M3 – 1.1820, M4 – 1.1870, M5 – 1.1919, M6 – 1.1969.
In weekly terms, the central pivot point is at 1.2075. The three key resistance levels are as follows: R1 – 1.2151, R2 – 1.2299, R3 – 1.2375. The three key support levels are: S1 – 1.1927, S2 – 1.1851, S3 – 1.1703.
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