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Talking Points:
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German Unemployment Change (000’s) (Jul): -12K Actual Vs -5K Estimated; 7K Prior.
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German Unemployment Rate (Jul): 6.7% Actual Vs 6.7% Estimated; 6.7% Prior.
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EUR/USD Recoups All Its Losses Earlier in the Session, But Fails To Crack 1.3400.
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The German Unemployment Change data for the month of July came in at -12,000 versus the prior month print of 7,000. This is the biggest fall since April 2014, and exceeded market expectations of -5,000. Moreover, German Unemployment Rate registered at 6.7 percent for the month of July, which is a reading that has not changed for the last four months.
Ahead of the data, EUR/USD trimmed some of its losses from the earlier session to trade at 1.3392. After the release, the Euro managed to recoup all of its earlier losses against the US Dollar, but failed to break the psychologically significant 1.3400 level. This was on the backdrop of a better-than-expected reading in June’s Italy Unemployment Rate, which crossed the wires at 12.3 percent versus 12.6 percent in the prior month.
Looking ahead, the July’s Eurozone CPI is due at 09:00 GMT, today. The market is calling for a reading of 0.5 percent year-on-year. DailyFX Currency Strategist Ilya Spivak mentions any downside surprise in the Eurozone’s price-growth figure will feed ECB stimulus expansion bets, weighing on the Euro. Furthermore, the focus will be back on the US Dollar as the much anticipated July Non-Farm Payroll (NFP) figure and the US Unemployment Rate are due on Friday, 12:30 GMT. The consensus is an addition of 231,000 jobs for the July’s NFP and the unemployment rate to equal the prior month’s reading of 6.1 percent. Any upside surprise in the job figures could generate further gains for the greenback says DailyFX Currency Analyst David De Ferranti.
For those deliberating on technical analysis, Ilya Spivak has designated near-term support to rest at 1.3396 (61.8% Fibonacci Exp.) and resistance at 1.3454 (50% Fibonacci Exp.). He remains short EUR/USD on half of the original position and in line with the long-term fundamental outlook. Meanwhile according to DailyFX Speculative Sentiment Index, 60 percent of retail Forex traders are long the EUR/USD.
EUR/USD 5 Minute Chart
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Edward Hyon, DailyFX Research Team
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