Euro Appearing Vulnerable Ahead of Ruble Gas Payments, US NFP

EUR/USD News and Analysis

• Ruble gas payments come due as Germany reject Putin’s payment demands
• The euro appears vulnerable ahead of strong US NFP forecasted data
• EUR/USD key technical levels

Euro Appearing Vulnerable as Ruble Gas Payment Deadline Approaches

The euro appears vulnerable once more as today marks a significant day for European energy supplies as Russia stands ready to accept rubles for future deliveries. Putin demanded that future gas purchases be paid for in rubles as opposed to euros or dollars as was previously agreed.

G7 countries, of which Germany is a part of, rejected Putin’s terms. Earlier this week Germany issued an ‘early warning’, triggering the initial phase of an emergency gas law as the nation prepares for possible gas rationing amid the very real prospect of gas shortages. Germany is highly reliant on Russian gas for its energy needs with Russia making up around 40% of its supplies. Therefore, the euro looks vulnerable and could erase all of its recent gains vs the dollar.

Strong US Labor Market All Set for Further Gains

Today marks NFP Friday, where the US is expected to have added 490,000 jobs for March. That is on top of an impressive 678,000 added jobs in February. While heightened volatility around the event is expected, even a large miss in the data point is unlikely to derail the Fed’s all out hawkishness as it prepares for the potential of multiple 50 basis point hikes in the coming Fed meetings – keeping the dollar supported.

Customize and filter live economic data via our DaliyFX economic calendar

EUR/USD Key Technical Levels

The euro made impressive gains against the high-flying dollar but the recent relief rally appears under threat. Yesterday we witnessed a solid rejection of trendline support and broke back below 1.1120. A strong NFP figure could re-invigorate the US dollar which would see the psychological level of 1.1000 come into focus for EUR/USD with 1.0945 as the next level of support.

In the event that the euro strengthens, 1.1120 appears as support which coincides with the descending trendline.

EUR/USD Daily Chart

Source: TradingView, prepared by Richard Snow

IG Client Sentiment Data

• EUR/USD: Retail trader data shows 60.51% of traders are net-long with the ratio of traders long to short at 1.53 to 1.
• We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests EUR/USD prices may continue to fall.
• The number of traders net-long is 11.37% higher than yesterday and 6.16% lower from last week, while the number of traders net-short is 15.84% lower than yesterday and 3.78% lower from last week.
• Positioning is more net-long than yesterday but less net-long from last week. The combination of current sentiment and recent changes gives us a further mixed EUR/USD trading bias.

— Written by Richard Snow for DailyFX.com

Contact and follow Richard on Twitter: @RichardSnowFX