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EUR/USD lifted by German data
The jump in Germany factory orders for October helped EUR/USD recoup some of the losses it suffered overnight. It was a double victory for German factory orders, as the October report showed a 2.5% increase which easily exceeded the 0.6% estimate; the September reading was revised higher from a 0.8% increase to 1.1%.
The relative strength of the Germany economy explains why the nation is opposed to any drastic moves like QE and, as I stated before, the country usually gets its way when it comes to eurozone affairs.
Mario Draghi may not have announced any plans for government bond purchases yesterday, but the European Central Bank chief did cut eurozone growth and CPI forecasts for next year to 1% and 0.7% respectively. The previous guidance (announced in September) was for 1.6% and 1.1%, and these figures were noted by traders.
Today’s session will be dominated by the US jobs report, and trading is likely to be subdued prior to the announcement. The US dollar basket is at a four-year high and yesterday we saw a pullback, but a good jobs report could trigger a fresh round of buying.
EUR/USD could encounter resistance at the 200-hour moving average of $1.2428, and the bears will be looking to $1.23 as the downside target.