Euro Finds Support Ahead Of ECB

Euro Finds Footing

EUR/USD traded higher on Wednesday as mixed but somewhat positive economic data buoyed the pair ahead of the ECB meeting tomorrow.

'Highly Accommodative' Fed

Speculation of the US Federal Reserve extending its stimulus increased this week after Federal Reserve Bank of San Francisco President John Williams told reporters yesterday in San Francisco that recent economic growth missed his expectations.

On Monday Federal Reserve Governor Jerome Powell said in a speech in San Francisco, “Monetary policy in the United States is likely to remain highly accommodative for some time.” The dovish comments helped to take some of the steam out of the recent upswing in the US Dollar, as the market awaits the major data to come later in the week.

Last week the Federal Open Market Committee announced its plan to continue the $85 billion monthly bond buying program until seeing indications of sustained economic growth.

Positive Services PMIs

Financial data company Markit reported on Wednesday that eurozone Final Services PMI came in at 51.6, beating expectations of 50.9 and higher than the prior reading of 50.9. The Services Purchasing Managers' Index (PMI) gauges the activity level of purchasing managers in the services sector. A level above 50 signals expansion in activity.

Eurozone Retail Sales Miss

Eurostat reported on Wednesday that eurozone retail sales disappointed in September, coming in at -0.6 percent versus expectations of -0.4 percent and falling from the reading of 0.5 percent in the prior month. Unemployment in the eurozone, currently standing at 12.2 percent has continued to add pressure to the retail sector.

German Factory Orders Shine

The euro spiked higher in Wednesday trading on the news that German factory orders beat expectations in September.

Factory orders, a leading indicator of production, came in at 3.3 percent, far exceeding expectations of 0.6 percent and rising from the prior months reading of -0.3 percent, sparking optimism over the economic health of the eurozone's largest economy.

Looking at the EUR/USD daily chart, we can see that price has managed to hold above the support of a well defined uptrend line ahead of the pivotal data later this week.
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BY Dan Blystone