EUR/USD Dives Below 1.3200 After German Unemployment Data
- German Unemployment Change (000’s) (Jul): 2K Actual Vs -5K Estimated; 12K Prior.
- German Unemployment Rate (Jul): 6.7% Actual Vs 6.7% Estimated; 6.7% Prior.
- EUR/USD Breaks Below 1.3200 After the Release; Looking Ahead German CPI and Revised 2Q US GDP.
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The German Unemployment Change for the month of August came in at 2,000 versus 12,000 in July (revised higher). This missed market expectations calling for a fall in unemployment by 5,000. Despite an increase in unemployment, August German Unemployment Rate came in at 6.7 percent. This was consistent with five consecutive months and met with market forecasts of 6.7 percent. The aforementioned data is important and should be taken into consideration by forex traders as further deterioration in unemployment may keep the European Central Bank (ECB)on the sidelines throughout the remainder of 2014 says DailyFX Currency Analyst David Song.
Ahead of the data, EUR/USD managed to push above the critical 1.3200 level to trade at 1.3203. Immediately after the release, the Euro took a dive but remained relatively muted against the US Dollar amid breaking below the psychologically important 1.3200 mark.
Focusing ahead, EUR/USD will be fed by the release of August’s German Consumer Price Index (CPI) data and the revised second-quarter US GDP report, which is due at 12:00 GMT and 12:30 GMT respectively, later today. The 2Q US GDP report is expected, by the market, to be revised down to 3.9 percent from an initial reading of 4.0 percent. DailyFX Currency Strategist Ilya Spivak says softer-than-expected print may undermine the speculation of a sooner-than-later interest rate hike by the Federal Reserve, which bodes-ill for the US Dollar. Finally, Eurozone CPI numbers are set to take center stage on Friday and its outcome may provide traders with more information of the timing and the possibility for further easing by the ECB.
For those forex traders that endorse technical analysis when trading, Ilya Spivak mentions near-term support to rest at 1.3151 (76.4% Fib Ret.) and near-term resistance at 1.3232 (14.6% Fib Ret.). He is short EUR/USD at 1.3644 in line with his long-term fundamental outlook. Meanwhile according to DailyFX Speculative Sentiment Index, the ratio of long to short positions in the EUR/USD stands at 1.79 as 64 percent of traders are long.
EUR/USD 5 Minute Chart
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Edward Hyon, DailyFX Research Team
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