Top Story

EUR/USD At 4 Month Low On Weak German Data, NFP Next

The euro is under pressure in early trade on Friday following yet more disappointing data from Germany. German industrial production declined by more than expected -3.5% mom in December, greater than the -0.2% fall forecast. Annually production declined -8.7% well short of the -6% expected. French industrial output numbers also badly disappointed. 

The weak industrial production data comes hot on the heels of dismal German factory orders which showed an unexpected decline to -2.1% mom. 

The data confirms that the manufacturing slump continues in Europe’s largest economy. Whilst there was a temporary pick up in November, that proved to be short live and December figures are showing a continuation, if not an acceleration of the downward trend.

That said, it’s not all doom and gloom, soft indicators still point to a bottoming out and a stabilization in the manufacturing sector. However, that was before the coronavirus outbreak took hold. Supply chain disruptions and, Chinese economic growth is forecast to slow considerably which could push any form of recovery in the German manufacturing sector, however slow, firmly off track. 

NFP up next
The dollar has been in favour across the past week thanks upbeat US data. The ADP private payrolls, ISM manufacturing and non-manufacturing all surprised to the upside. Traders are now looking ahead to non-farm payrolls. Expectations are for 160,000 jobs to have been created. Unemployment rate is expected to stay steady at 3.5%, whilst wages are due to increase 0.3% compared to 0.1% in December.

Levels to watch
EUR/USD is down 0.25% hovering around 4-month lows of $1.0950. Whilst it has dipped below -30 on RSI indicating over sold conditions, it trades firmly below its 50,100 and 200 sma with downside momentum.
Support can be seen at $1.0940 (low 8th Oct) prior to $1.0879 (low 4th Oct).
On the flip side, resistance could be at $1.10 (round number), opening the door to $1.1077 (200 sma) prior to $1.1112 (high 21st Jan)



Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.