Yesterday’s trade saw EUR/USD within the range of 1.0846-1.0969. The pair closed at 1.0856, falling 0.74% on a daily basis, or the most since January 5th, when a daily drop of 0.78% was registered. It has been the fourth drop in the past six trading days and also a second consecutive one. The daily high has been the highest level since December 29th 2015, when a high of 1.0992 was reached.
At 7:20 GMT today EUR/USD was gaining 0.30% for the day to trade at 1.0892. The pair touched a daily high at 1.0894 at 7:16 GMT, overshooting the range resistance level (R3). Support may be received at the hourly 200-period EMA (1.0868) and then – in the area around the low from January 11th (1.0846). Resistance, on the other hand, may be encountered at the psychological 1.0900 level and then – in the area around the high from January 11th (1.0969).
Today EUR/USD trading may be influenced by the macroeconomic reports and other events as listed below.
Fundamentals
United States
Feds Fischer statement
At 10:30 GMT the Vice Chairman of the Board of Governors of the Federal Reserve, Stanley Fischer, is expected to take a statement. Limited-to-moderate volatility of the currency pairs containing the US dollar is usually present during his speeches.
Job Openings
The number of job openings in the United States probably increased to 5.410 million in November from a month ago, according to the median forecast by experts. In October 5.383 million job openings were reported, or the lowest number since August. This indicator refers to all job positions that are open, but not filled on the last business day of the month. Job openings are part of the Job Openings and Labor Turnover Survey (JOLTS), which gathers data from about 16 400 non-farm establishments including retailers and manufacturers, as well as federal, state, and local government entities in the 50 states and the District of Columbia. The survey assesses the unmet demand for labor in the labor market. Higher-than-projected number of openings will usually have a limited bullish effect on the US dollar. The Bureau of Labor Statistics is to release the official data at 15:00 GMT.
Bond Yield Spread
The yield on German 2-year government bonds went as high as -0.377% on January 11th, after which it closed at -0.380% to add 0.009 percentage point in comparison with January 8th. It has been the 7th gain in the past 19 trading days.
The yield on US 2-year government bonds climbed as high as 0.964% on January 11th, after which it closed at 0.940% to add 0.004 percentage point compared to January 8th. It has been the 8th gain in the past 19 trading days.
The spread between 2-year US and 2-year German bond yields, which reflects the flow of funds in a short term, narrowed to 1.320% on January 11th from 1.325% on January 8th. The January 11th yield spread has been the lowest one since December 22nd, when the difference was 1.319%.
Meanwhile, the yield on German 10-year government bonds soared as high as 0.551% on January 11th, after which it slid to 0.550% at the close to add 4.1 basis points (0.041 percentage point) compared to January 8th. It has been the 10th gain in the past 19 trading days.
The yield on US 10-year government bonds climbed as high as 2.179% on January 11th, after which it slipped to 2.174% at the close to add 5.8 basis points (0.058 percentage point) compared to January 8th. It has been the 7th gain in the past 19 trading days.
The spread between 10-year US and 10-year German bond yields widened to 1.624% on January 11th from 1.607% on January 8th. The January 11th yield difference has been the largest one since January 6th, when the spread was 1.657%.
Taking into account the period January-December 2015 and basing our calculations on weekly closing prices, we came to the conclusion that EUR/USD performance and the development of the yield spread between 10-year bonds in the United States and Germany showed a correlation of -0.6088, or the pair and the spread moved strongly in opposite directions. As the yield spread grew in favor of the 10-year US bonds, the US dollar gained ground against the euro. During the period January-December, EUR/USD has depreciated 9.52%, while the spread between 10-year bond yields in both countries has widened 1.11% to reach approximately 1.63% in late December from approximately 1.62% in early January.
Daily and Weekly Pivot Levels
By employing the Camarilla calculation method, the daily pivot levels for EUR/USD are presented as follows:
R1 – 1.0867
R2 – 1.0879
R3 (range resistance) – 1.0891
R4 (range breakout) – 1.0924
S1 – 1.0845
S2 – 1.0833
S3 (range support) – 1.0822
S4 (range breakout) – 1.0788
By using the traditional method of calculation, the weekly pivot levels for EUR/USD are presented as follows:
Central Pivot Point – 1.0863
R1 – 1.1018
R2 – 1.1103
R3 – 1.1258
S1 – 1.0778
S2 – 1.0623
S3 – 1.0538
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