Tag: EUR-USD

EUR/USD – Euro Slips to 6-Month Low on Weak German, Eurozone PMIs

After a quiet start to the week, EUR/USD has posted considerable losses in the Wednesday session. Currently, the pair is trading at 1.1726, down 0.45% on the day. On the release front, German and eurozone PMIs missed expectations in the manufacturing and services sectors. In the US, the key event is the release of the Federal Reserve minutes from the May policy meeting. On Thursday, Germany releases Final GDP and GfK Consumer Climate, and the ECB will publish the minutes of its April policy meeting. The US will release unemployment claims and Existing Home Sales.

Weak PMI data in May has sent the euro lower in the Wednesday session, as the currency dipped below the 1.17 line for the first time since mid-November. Investors are particularly concerned that both German and eurozone manufacturing PMIs dropped for a fifth straight month. German Manufacturing PMI posted its weakest gain in 16 months, while the eurozone indicator posted its worst reading in 18 months. These numbers, while certainly disappointing, should not cause any alarm, as the PMIs continue to indicate expansion in the services and manufacturing sectors. Still, the fact that growth was softer than expected could give ECB policymakers reason to re-evaluate the planned wind-up of its stimulus program in September.

The Federal Reserve will be in the spotlight on Wednesday, as analysts pore over the minutes of the May policy meeting. The Fed did not raise rates at the meeting, but a strong US economy has raised expectations that the Fed will press the rate trigger in June – according to the CME Group, the odds of a June hike stand at 100%. The markets will be looking for some guidance from the May minutes, and if the message from Fed policymakers is hawkish, traders can expect the dollar to post gains against the euro and other major rivals.

  Fed Minutes to Drive Market as Trade Concerns Recede

  Another Turkish Lira flash crash

EUR/USD Fundamentals

Wednesday (May 23)

  • 3:00 French Flash Manufacturing PMI. Estimate 53.6. Actual 55.1
  • 3:00 French Flash Services PMI. Estimate 57.1. Actual 54.3
  • 3:30 German Flash Manufacturing PMI. Estimate 57.9. Actual 56.8
  • 3:30 German Flash Services PMI. Estimate 53.1. Actual 52.1
  • 4:00 Eurozone Flash Manufacturing PMI. Estimate 56.1. Actual 55.5
  • 4:00 Eurozone Flash Services PMI. Estimate 54.7. Actual 53.9
  • 9:45 US Flash Manufacturing PMI. Estimate 56.6
  • 9:45 US Flash Services PMI. Estimate 54.9
  • 10:00 Eurozone Consumer Confidence. Estimate 0
  • 10:00 US Crude Oil Inventories. Estimate -2.5M
  • 14:00 US FOMC Meeting Minutes

Thursday (May 24)

  • 2:00 German Final GDP. Estimate 0.3%
  • 2:00 German GfK Consumer Climate. Estimate 10.8
  • 4:00 ECB Financial Stability Review
  • 7:30 ECB Monetary Policy Meeting Accounts
  • 8:30 US Unemployment Claims. Estimate 220K
  • 10:00 US Existing Home Sales. Estimate 5.56M

*All release times are DST

*Key events are in bold

 

EUR/USD for Wednesday, May 23, 2018

EUR/USD for May 23 at 4:30 DST

Open: 1.1778 High: 1.1790 Low: 1.1699 Close: 1.1726

 

EUR/USD Technical

S1 S2 S1 R1 R2 R3
1.1448 1.1613 1.1718 1.1809 1.1915 1.2025

EUR/USD ticked lower in the Asian session and has posted stronger losses in European trade

  • 1.1718 is fluid. Currently, it is providing weak support
  • 1.1809 is the next resistance line

Further levels in both directions:

  • Below: 1.1718, 1.1613, 1.1448 and 1.1313
  • Above: 1.18o9, 1.1915 and 1.2025
  • Current range: 1.1718 to 1.1809

OANDA’s Open Positions Ratio

EUR/USD ratio is almost unchanged in the Wednesday session. Currently, long positions have a majority (55%), indicative of trader bias towards EUR/USD reversing directions and moving higher.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Another Turkish Lira flash crash

Another Turkish Lira flash crash  

A busy start to the session dealing with yet another mini TRY flash crash as the bad Lira news continues to compound. Otherwise, global Forex and fixed income markets remain in neutral  overnight and predictably focused on the upcoming FOMC minutes

The Turkish Lira meltdown. As far as I can tell was little more than a liquidity crunch reminding the Efx space again just how weak liquidity is during less than ideal times. As usual, the predictably fall out from the TRYJPY carry trade  has kept my desk hoping this morning

President Trump was keen to remind us overnight that trade war is not about to leave the stage anytime soon declaring he is  “not pleased” with the results of China trade but sees them as “a start.” Which then triggered a subtle risk reversal on US equities leaving investors rudderless and prone  heading into today’s Asia session

Oil Markets 

Oil prices had taken a respite although their far-reaching implications across asset classes most likely contributed to denting equity sentiment when Washington suggested oil prices have gone too far. With US gas prices jumping to 3 dollars per barrel in the states ahead of peak driving season, the political backlash not to mention the likelihood surging oil prices will sap some momentum from the US economy has caught the US administrations attention. Which of course puts more focus on Vienna Group’s decisions on whether and when to increase production in response to the latest supply shocks from Iran and Venezuela

Gold Markets
The US dollar continues to drive the Gold bus as a short covering US dollar rally has tentatively lifted the gold bulls spirits. But the market remains mired in no man’s land as the break fo 1300 did create enough of a fire sale to shock gold market into submission. The markets will not shift to the FOMC minutes for inflation updates as any suggestion that the Feds do see a pick up beyond their 2% target could be interpreted bullishly for Gold which should find support as an inflation hedge

Currencies

EUR: challenging to avoid the excessive noise around the Italian political scene but the focus remains on the FOMC and ECB statement.

JPY: USDJPY is coming off rather aggressively this morning as more disclosures have been noted from PM Abe stemming from the Kake school scandal. Attention remains focused on the Nikkei which is cratering this morning and triggering some interday USDJPY stop losses below 110.75 in this mini-meltdown. Liquidity has been thin post TRYJPY meltdown, so this could be exacerbating moves, but we should expect some ” bargain hunting below 110.50 to keep the movement contained at least for the short term

MYR: Profit taking on the broader USD with US bond yields remain stable has improved local sentiment however the market is in desperate need of fiscal clarity, and this fact alone will hold foreign investors at bay despite some desirable levels on both bond and currency markets. Despite foreign investors shying the local markets, domestic funds have been significant equity buyers which continues to underpin domestic sentiment.

EUR/USD – Euro Edges Higher, Investors Look for Cues

EUR/USD is showing little movement this week. In the Tuesday session, the pair is trading at 1.1814, up 0.19% on the day. On the release front, there are no major German or eurozone indicators. In the US, the sole indicator is the Richmond Manufacturing Index. On Tuesday, Germany and eurozone will release manufacturing and services PMI reports. In the US, the Federal Reserve will release the minutes of its May policy meeting.

As Italy moves towards establishing a new government, the EU is watching nervously. Two euro-sceptic parties, the Lega Nord and the Five Star Movement have reached an agreement and requested approval to form a government from the country’s president. The platform issued by the parties calls for increased deficit spending and a review of European Union fiscal rules. So far, neither party has called for a referendum on Italian membership in the European Union or demanded that the EU cancel the portion of Italy’s debt that it holds. Still, Italy is the third largest economy in the EU (with Britain heading out the door), and any moves which will put Italy on a collision course with the EU could have a negative impact on investor sentiment towards the euro. On Monday, ECB governing council member Ewald Nowotny admitted that the political situation in Italy had “created a lot of nervousness”, but that the new government would be judged on its actions.

There was a dramatic development in the China-US tariff battle on the weekend, as US Treasury Secretary Steven Mnuchin said that the trade war was being ‘put on hold’. Just last week, the White House sounded pessimistic about a deal being reached with China. The two economic giants have traded stiff tit-for-tat tariffs in recent weeks, worth billions in trade. These moves had raised fears of a bilateral trade war between the two largest economies in the world. The respite in tariffs means that the US can now discuss the US trade deficit with China, which President Trump has long complained is a result of a non-level playing field with China. In addition to the trade deficit, the US wants to discuss technology transfers and cyber theft.

  Commodity currencies are beaming

EUR/USD Fundamentals

Tuesday (May 22)

  • Tentative – German Buba Monthly Report
  • 10:00 US Richmond Manufacturing Index. Estimate 9

Wednesday (May 23)

  • 3:30 German Flash Manufacturing PMI. Estimate 57.9
  • 3:30 German Flash Services PMI. Estimate 53.1
  • 4:00 Eurozone Flash Manufacturing PMI. Estimate 56.1
  • 4:00 Eurozone Flash Services PMI. Estimate 54.7
  • 10:00 Eurozone Consumer Confidence. Estimate 0
  • 14:00 US FOMC Meeting Minutes

*All release times are DST

*Key events are in bold

EUR/USD for Tuesday, May 22, 2018

EUR/USD for May 22 at 5:10 DST

Open: 1.1791 High: 1.1830 Low: 1.1757 Close: 1.1815

EUR/USD Technical

S1 S2 S1 R1 R2 R3
1.1613 1.1718 1.1809 1.1915 1.2025 1.2092

EUR/USD edged lower in the Asian session but has reversed directions and posted gains in European trade

  • 1.1809 was tested earlier in support and is a weak line
  • 1.1915 is the next resistance line

Further levels in both directions:

  • Below: 1.1809, 1.1718, 1.1613 and 1.1448
  • Above: 1.1915, 1.2025 and 1.2092
  • Current range: 1.1809 to 1.1915

OANDA’s Open Positions Ratio

EUR/USD ratio is showing gains towards long positions. Currently, long positions have a majority (54%), indicative of trader bias towards EUR/USD continuing to move higher.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Commodity currencies are beaming

 

Currency Markets 
The US dollar has given up some of its gains overnight as investors keenness for Greenbacks has temporarily abated. The shifting dynamics around trade and tariffs does give pause for thought as US dollar bulls are consolidating gains at a very tricky and treacherous junction for both the USD and US bond yields. After making some significant advances last week, USD profit taking was the name of the game in Monday NY session.

Commodity currencies are beaming on the back of surging Commodity Indexes as oil prices broke through last week high water mark. The de-escalation in the US -Sino tariff and trade has put to rest, temporarily albeit, some of the market biggest fears around a Global growth slowdown and commodity markets and prices are returning in vogue.

Also,  there’s the usual air of uncertainty with both May FOMC minutes and  April ECB minutes due this week. Trader’s will be more inclined not to get ahead of the curve before these releases.

EM currencies performed better overnight as stretched positions unwound and the bounce in oil prices provided some idiosyncratic benefits to petrol related currencies. However,  the common denominator in the EM space remains the stronger USD which could continue to run amok after the overnight profit taking inspired u-turn.

So far, the beginning of the week is  shaping up to be all about consolidating and gingerly contesting last week’s significant breakouts

Oil Markets

The markets positive take on “no trade war “and Venezuela political woes are driving Oil prices higher. The global condemnation surrounding the election of incumbent Venezuelan president Nicolas Maduro has as expected trigged the Trump administration to levee new sanctions on the debt-ridden country. Tightening the economic screws will severely cripple  Petróleos de Venezuela ability to export while making it virtually impossible for the country to acquire dollars.

Also, US secretary of state Mike Pompeo raised the Iran sanctions bar by promising to impose the “strongest sanctions in history” on Iran to bring it to the bargaining table for a new nuclear deal.

The effect of OPEC -Non-OPEC supply compliance and the US abandonment of the JCPOA has created ultra-tight supply conditions to the point where any hint of supply disruption will send oil prices soaring. Supply-side dynamics are apparently in the driver’s seat suggesting prices should push higher near term.

Equity Markets

Equity investors revelled as trade war fears have temporarily abated suggesting the parties are heading on a far more appealing approach than feared. But hope springs eternal that both superpowers can iron out a market-friendly bilateral trade agreement and at the minimum maintain, stay at the negotiation table until the more contentious trade issues can be ironed out. The fear is that the “no trade war “announcement is little more than kicking the can down the road., but only time will tell.

Gold Markets
Gold price movements continue to be as much as anything a USD trade. Gold prices moved off overnight lows on the back of USD profit taking. But from both a fundamental and technical picture the Gold bears continue to have the upper hand as bullish signals are non-existent. Given the resurgent dollar, a reprieve on the trade war front, equity markets stabilising and evaporated geopolitical risk premiums, the balance of risks suggests gold prices move lower over the near term.

Currencies

EUR: A bit of a mixed bag overnight with ECB’s Nowotny erring dovish but Italian Political risk premiums eased after Conte is said to be the next Prime Minister. However, given the Italian affair has little chance of a spill over into other peripheral debt and with the ECB already leaning very dovish with the first hike not priced until September 2019, the Italian risk should be of little influence on ECB policy.

JPY: After falling to move above 111.40 overnight, the dollar bulls turned more conservative without the support from higher US yields as 10 Year UST’s were little changed from last weeks levels

AUD: Strong Beta currencies are benefiting from the conciliatory actions on the US-China trade front as global equity markets soared and Wall Street has followed suit starting the week on a robust note. But the bullish case for commodities on the back of surging oil prices is building which is underpinning AUD sentiment.

MYR: We would typically expect USAsia to trade lower as the US dollar has taken a bit of a detour overnight. However, the Riggit remains vulnerable to the lack of insight into fiscal planning.  But markets levels look attractive from both a Bond yield and currency perspective not to mention surging oil prices, so we are left to surmise that once fiscal clarity is offered, we could finally see the Ringgit sentiment improve. I the meantime   EM Asia FX will remain susceptible to the stronger USD

EUR/USD – Euro Edges Lower, German Markets Closed for Holiday

EUR/USD continues to trade quietly. In the Monday session, the pair is trading at 1.1743, down 0.27% on the day. The On the release front, German markets are closed for Whit Day, and there are no German or eurozone indicators. In the US, the sole event is a speech from FOMC member Rafael Bostic.

The Italian election back in March was inconclusive, and the new political landscape could spell bad news for Brussels. Two euro-sceptic parties, the Lega Nord and the Five Star Movement have reached an agreement and appear poised to form the next government. The platform issued by the parties call for increased deficit spending and a review of European Union fiscal rules. So far, neither party has called for a referendum on Italian membership in the European Union or demanded that the EU cancel the portion of Italy’s debt that it holds. Still, Italy is the third largest economy in the EU (with Britain heading out the door), and any moves which will put Italy on a collision course with the EU could have a negative impact on investor sentiment towards the euro.

There was a dramatic development in the China-US tariff battle on Sunday, as US Treasury Secretary Steven Mnuchin said that the trade war was being ‘put on hold’. Just last week, the White House sounded pessimistic about a deal being reached with China. The two economic giants had traded stiff tit-for-tat tariffs in recent weeks, worth billions in trade. These moves had raised fears of a bilateral trade war between the two largest economies in the world. The respite in tariffs means that the US can sit down with the Chinese and discuss the US trade deficit with China, which President Trump has long complained is a result of a non-level playing field with China. The news that the sides had backed down sent stock markets higher, and traders will likely be greeted with gains when European markets reopen on Tuesday.

 

  A test of the breakouts

EUR/USD Fundamentals

Monday (May 21)

  • 11:30 US FOMC Member Rafael Bostic Speaks

Tuesday (May 22)

  • Tentative – German Buba Monthly Report
  • 8:30 US Wholesale Sales. Estimate 0.9%
  • 10:00 US Richmond Manufacturing Index. Estimate 9

*All release times are DST

*Key events are in bold

 

EUR/USD for Monday, May 21, 2018

EUR/USD for May 21 at 5:40 DST

Open: 1.1771 High: 1.1776 Low: 1.1717 Close: 1.1738

EUR/USD Technical

S1 S2 S1 R1 R2 R3
1.1448 1.1613 1.1718 1.1809 1.1915 1.2025

EUR/USD edged lower in the Asian session and has inched lower in European trade

  • 1.1718 was tested earlier in support
  • 1.1809 is the next resistance line

Further levels in both directions:

  • Below: 1.1718, 1.1613 and 1.1448
  • Above: 1.1809, 1.1915, 1.2025 and 1.2092
  • Current range: 1.1718 to 1.1809

OANDA’s Open Positions Ratio

EUR/USD ratio is unchanged in the Monday session. Currently, long positions have a majority (54%), indicative of trader bias towards EUR/USD reversing directions and moving higher.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

A test of the breakouts

A test of the breakouts 

This week should be all about contesting and consolidating last week’s significant breakouts in 10 year UST, EURUSD, USDJPY and Oil Prices. And despite weekend inspired short-covering in US fixed income, we’ve seen a weekly close in US 10y above 3.05 %. And with the Baker Hughes rig count holding steady, the tumultuous trifecta of USYields, US Dollar and OIl prices, should get set to resume their upward trajectory.

While significant economic data fixtures will be far and few this week, markets will be inundated with central bank speakers, including four central bank governors (Fed Chair Powell, RBA Governor Lowe, Riksbank Governor Ingves, and BoE Governor Carney). Also, traders will navigate the May FOMC minutes, April ECB minutes and Riksbank Financial Stability Report.

The May FOMC minutes will be of particular interest after the markets shaded the May 2 FOMC meeting dovish. But with the market now slightly leaning to the four rate hike camp this year, any hawkish glean would raise that conviction and should propel the dollar to new yearly highs.

The latest statement on the China-US trade suggests both parties are happy to avoid the dreaded tit for tat escalation while working towards a more market-friendly bilateral trade agreement. But the intentional vagueness delivered by both parties statements suggests a great divide, but there’s a hint of a consensus, none the less, to bridge that gap. So given the possible worst-case scenario was avoided the market should view the latest trade discussions as a favourable and equity market should be in that happy place, at least for today

Oil prices

The US and China agreeing to no trade war will be positive for Oil prices given that the possibility of a full-out trade war would have dealt a significant blow to global growth.

The well documented dual supply disruptions from Iran and Venezuela continue to drive current sentiment. But with the pipeline constraints in the Permian Basin in focus and continuing to factor, the supply side dynamics suggest prices will remain firm through 2018. And throw in a positive demand fillip from a de-escalation of trade wars and prices could run higher for longer.

No change in US oil rig counts this week holding steady at 844 and about half of the heyday numbers of the Oct 2014 high, when oil was at $80. Suggesting no Monday morning downside test is in the offing

Gold Prices

Gold prices rebounded off weakly lows as the US dollar eased on the back of profit-taking ahead of the weekend. With geopolitical premiums getting exhausted, gold bulls are in search of the next significant catalyst. But, gold remains under pressure from the US dollar and utterly vulnerable to higher US bond yields which are showing signs of a strong topside breakout after the 10-year Treasury note yield hit 3.1 % overnight. The inflationary overtones from oil prices coupled with a strong US retail sales print have increased Fed rate hike expectations. This week FOMC minutes could be a key driver for near-term USD sentiment so we should expect Gold and the USD to remain relatively rangy head of the release

Currencies
The depth of USD appreciation in recent weeks has exceeded virtually everyone expectations. What started as a purge of long EURUSD positioning has manifest into a full USD bull. I think G-10 dealer will go AUD and JPY route to express stronger US dollar bias from a catch-up perspective. EURO could start to take cues from the USDJPY which could assert itself as the dominant driver near-term

JPY: With equities stabilised and 10y yields in the US breaking out of 3.05, USDJPY has arguably underperformed so we could see USDJPY lead the USD bulls to charge over the near term. Correlation with fixed income remains robust and UsdJpy touching 111.00 as US 10 year yields reached 3.125

MYR: Oil prices remain high but so too does political risk, particularly the discussion around GST and SST and how the Credit agencies will view the drop in budget finances
Also, the USD continues to firm against all Asian currencies, and this may be caused by US and China trade negations that will carry on tomorrow.

Outside of oil positivity, the negatives are building as   the USD could continue to grind higher near-term

EUR/USD – Euro Trading Sideways on Lack of Eurozone Data

EUR/USD is showing little movement in the Thursday session. Currently, the pair is trading at 1.1817, up 0.07% on the day. On the release front, there are no German or eurozone indicators. In the U.S, there are two key events, which could impact on the movement of EUR/USD. The Philly Fed Manufacturing Index is expected to drop to 21.2, while unemployment claims are forecast to rise to 216 thousand.  On Friday, Germany releases PPI and the eurozone publishes current account and trade balance.

The eurozone economy has performed well in 2018, but inflation has lagged behind and remains well below the ECB inflation target of around 2 percent. German Final CPI for April dropped to a flat 0.0%. Although this matched the forecast, this marked a 3-month low. Eurozone inflation indicators followed a similar trend, losing ground in April. Final CPI edged lower to 1.2%, down from 1.3% a month earlier. Final Core CPI followed a similar trend, dropping from 1.0% to 0.7%. Weak inflation levels could have a significant impact on ECB fiscal policy, as policymakers may have to consider extending its stimulus scheme, which is scheduled to run until September.

Bank of France Governor Francois Villeroy de Galhau raised some eyebrows this week after making hawkish comments about ECB interest rates hikes. Villeroy said that the ECB could soon provide additional guidance on the timing of a rate hike. In its last rate statement, the ECB said that any rate hikes would occur ‘well past’ the wrap-up of the stimulus program, which is slated to end in September. Villeroy stated that ‘well past’ could be a matter of quarters, rather than years. Investors snapped up euros on Monday after Villeroy’s comment, but the euro failed to hold onto these gains and ended the Monday session with small losses.

The U.S economy continues to perform well, but the Federal Reserve target of 2 percent remains elusive. CPI rebounded with a gain of 0.2%, but this fell short of the estimate of 0.3%. Core CPI edged lower to 0.1%, shy of the forecast of 0.2%. Inflation levels will be an important factor for the Fed in its monetary policy projection, which remains at two more hikes in 2018. The odds of a rate hike at the June hike stands close to 100%, and the US dollar could continue to make broad gains as we get closer to the June policy meeting.

The trend is your friend.

 

EUR/USD Fundamentals

Thursday (May 17)

  • 4:00 Italian Trade Balance. Estimate 3.74B. Actual 4.53B
  • Tentative – Spanish 10-year Bond Auction
  • 8:30 US Philly Fed Manufacturing Index. Estimate 21.1
  • 8:30 US Unemployment Claims. Estimate 216K
  • 10:00 US CB Leading Index. Estimate 0.4%
  • 10:30 US Natural Gas Storage. Estimate 105B

Friday (May 18)

  • 2:00 German PPI. Estimate 0.3%
  • 2:00 German WPI. Estimate 0.2%
  • 3:00 US FOMC Member Loretta Mester Speaks
  • 4:00 Eurozone Current Account. Estimate 35.1B
  • 5:00 Eurozone Trade Balance. Estimate 20.7B

*All release times are DST

*Key events are in bold

 

EUR/USD for Thursday, May 17, 2018

EUR/USD for May 17 at 5:25 DST

Open: 1.1808 High: 1.1838 Low: 1.1792 Close: 1.1817

 

EUR/USD Technical

S1 S2 S1 R1 R2 R3
1.1613 1.1718 1.1809 1.1915 1.2025 1.2092

EUR/USD ticked higher in the Asian session and has been marked by choppy trade in the European session

  • 1.1809 is fluid. Currently, it is a weak support line
  • 1.1915 is the next resistance line

Further levels in both directions:

  • Below: 1.1809, 1.1718, 1.1613 and 1.1448
  • Above: 1.1915, 1.2025 and 1.2092
  • Current range: 1.1809 to 1.1915

OANDA’s Open Positions Ratio

EUR/USD ratio is unchanged in the Thursday session. Currently, long positions have a small majority (52%), indicative of a slight trader bias towards EUR/USD continuing to move higher.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

EUR/USD – Euro Softer, German and Eurozone CPI Match Expectations

EUR/USD has posted losses in the Wednesday session, continuing the downward trend we saw on Tuesday. Currently, the pair is trading at 1.1803, down 0.31% on the day. On the release front, German and eurozone CPI releases matched their estimates. ECB President Mario Draghi will speak at an ECB event in Frankfurt. In the U.S, Housing Starts and Building Permits are expected to remain unchanged, at 1.32 million and 1.35 million, respectively. On Thursday, the U.S releases Philly Fed Manufacturing Index and unemployment claims.

German Final CPI continues to lose ground. The indicator dropped to 0.0%, marking a 3-month low. Eurozone Final CPI edged lower to 1.2%, down from 1.3% a month earlier. Eurozone Final Core CPI followed a similar trend, dropping from 1.0% to 0.7%. If inflation levels continue to soften, the ECB will have to consider extending its stimulus scheme, which is scheduled to run until September. Germany will release additional inflation numbers on Friday.

First-quarter eurozone and German GDP data were within expectations, but investors should not become too sanguine, as the numbers pointed to a slowdown in the eurozone economy. Both Germany and the eurozone posted gains of 0.6% in the fourth quarter of 2017. Will economic conditions improve in Q2? Institutional analysts don’t seem optimistic, according to the well-respected ZEW Economic Sentiment surveys. The German indicator posted a sharp drop of -8.2 for a second straight month – the first declines since July 2016. The eurozone release improved to 2.4, but low reading certainly doesn’t show much optimism. The markets are bracing for more soft numbers on Wednesday, as Germany and eurozone release CPI reports. If these indicators miss their estimates, the euro could lose ground.

I’m a believer

Italian Politics Pounds Euro

EUR/USD Fundamentals

Wednesday (May 16)

  • 2:00 German Final CPI. Estimate 0.0%. Actual 0.0%
  • 5:00 Eurozone Final CPI. Estimate 1.2%. Actual 1.2%
  • 5:00 Eurozone Final Core CPI. Estimate 0.7%. Actual 0.7%
  • 5:35 German 10-year Bond Auction. Actual 0.62%
  • 8:00 ECB President Mario Draghi Speaks
  • 8:30 US Building Permits. Estimate 1.35M
  • 8:30 US FOMC Member Raphael Bostic Speaks
  • 8:30 US Housing Starts. Estimate 1.32M
  • 9:15 US Capacity Utilization Rate. Estimate 78.4%
  • 9:15 US Industrial Production. Estimate 0.6%
  • 10:00 US Mortgage Delinquencies
  • 10:30 US Crude Oil Inventories. Estimate -1.1M

Thursday (May 17)

  • 8:30 US Philly Fed Manufacturing Index. Estimate 21.1
  • 8:30 US Unemployment Claims. Estimate 219K

*All release times are DST

*Key events are in bold

 

EUR/USD for Wednesday, May 16, 2018

EUR/USD for May 16 at 6:30 DST

Open: 1.1837 High: 1.1854 Low: 1.1802 Close: 1.1803

 

EUR/USD Technical

S1 S2 S1 R1 R2 R3
1.1448 1.1613 1.1718 1.1809 1.1915 1.2025

EUR/USD continues to break below support levels this week. The pair inched lower in the Asian session but then recovered. EUR/USD has edged lower in European trade

  • 1.1718 is a providing support
  • 1.1809 has switched to a resistance role after losses by EUR/USD on Wednesday. It is a weak line

Further levels in both directions:

  • Below: 1.1718, 1.1613 and 1.1448
  • Above: 1.1809, 1.1915, 1.2025 and 1.2092
  • Current range: 1.1718 to 1.1809

OANDA’s Open Positions Ratio

EUR/USD ratio is almost unchanged in the Wednesday session. Currently, long positions have a small majority (52%), indicative of a slight trader bias towards EUR/USD reversing directions and moving lower.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Live FX Analysis – 15 May 2018 (Video)

It’s been an interesting month in financial markets in which the dollar has rediscovered its mojo, geopolitical risk has remained heightened, US corporates have shown their strength and central banks around the world have become less bullish.

Ahead of another busy data week, Senior Market Analyst Craig Erlam gives his views on the markets at the moment and takes you through the week’s key economic events.

Craig also gives his live analysis on EURUSD (13:23), GBPUSD (15:08), EURGBP (17:25), AUDUSD (19:08), USDCAD (20:33), GBPCAD (22:02), NZDUSD (25:22), USDJPY (27:14), GBPJPY (29:15) and EURJPY (30:53).

DAX Trading Sideways after Eurozone, Germany GDP

US Futures Pare Gains Ahead of Retail Sales Data

Rate Differentials and Trade Fears Handcuff Capital Markets

EUR/USD – Euro Unchanged as German, Eurozone GDP Meet Expectations

EUR/USD is almost unchanged in the Tuesday session. Currently, the pair is trading at 1.1927, unchanged on the day. On the release front, German Preliminary GDP came in at 0.3%, close to the forecast of 0.4%. Eurozone GDP came in at 0.4%, matching the forecast. German ZEW Economic Sentiment came in at -8.2, weaker than the estimate of -8.0 points. Eurozone ZEW Economic Sentiment was stronger, improving to 2.4 points. This beat the estimate of 2.0 points. In the US, the focus will be on consumer spending indicators. Retail Sales is expected to dip to 0.4%, while Core Retail Sales is expected to post a gain of 0.5%.

Second-quarter eurozone and German GDP data were within expectations, but investors should not become too sanguine, as the first quarter numbers pointed to a slowdown. Both Germany and the eurozone posted gains of 0.6% in the first quarter. Will economic conditions improve in Q2? Institutional analysts don’t seem optimistic, according to the well-respected ZEW Economic Sentiment surveys. The German indicator posted a sharp drop of -8.2 for a second straight month – the first declines since July 2016. The eurozone release improved to 2.4, but low reading certainly doesn’t show much optimism. The markets are bracing for more soft numbers on Wednesday, as Germany and eurozone release CPI reports. If these indicators miss their estimates, the euro could lose ground.

With the U.S economy performing well in 2018, the U.S consumer is feeling very optimistic. On Friday, the UoM Consumer Sentiment improved to 98.8 in April, beating the estimate of 98.4 points. The U.S labor market is at near or full employment, which has resulted in a slowdown in job growth due to a shortage of skilled workers. This was underscored last week, as JOLTS Job Openings climbed to a record 6.6 million. At the same time, inflation levels remain low, as the Federal Reserve target of 2 percent remains elusive. CPI rebounded with a gain of 0.2%, but this fell short of the estimate of 0.3%. Core CPI edged lower to 0.1%, shy of the forecast of 0.2%. Inflation levels will be an important factor for the Fed in its monetary policy projection, which remains at two more hikes in 2018. The odds of a rate hike at the June hike stands close to 100%.

Yields in focus, again

EUR/USD Fundamentals

Tuesday (May 15)

  • 2:00 German Preliminary GDP. Estimate 0.4%. Actual 0.3%
  • 2:45 French Final CPI. Estimate 0.1%. Actual 0.2%
  • 2:45 French Preliminary Private Payrolls. Estimate 0.4%. Actual 0.3%
  • 5:00 Eurozone Flash GDP. Estimate 0.4%. Actual 0.4%
  • 5:00 German ZEW Economic Sentiment. Estimate -8.0. Actual -8.2
  • 5:00 Eurozone Industrial Production. Estimate 0.6%. Actual 0.5%
  • 5:00 Eurozone ZEW Economic Sentiment. Estimate 2.0. Actual 2.4
  • 8:30 US Core Retail Sales. Estimate 0.5%
  • 8:30 US Retail Sales. Estimate 0.4%
  • 8:30 US Empire State Manufacturing Index. Estimate 15.1
  • 10:00 US Business Inventories. Estimate 0.2%
  • 10:00 US NAHB Housing Market Index. Estimate 70
  • 12:45 US FOMC Member John Williams
  • 16:00 US TIC Long-Term Purchases

Wednesday (May 16)

  • 14:00 German Final CPI. Estimate 0.0%
  • 5:00 Eurozone Final CPI. Estimate 1.2%
  • 8:00 ECB President Mario Draghi Speaks
  • 8:30 US Building Permits. Estimate 1.35M
  • 8:30 US Housing Starts. Estimate 1.33M

*All release times are DST

*Key events are in bold

EUR/USD for Tuesday, May 15, 2018

EUR/USD for May 15 at 5:55 DST

Open: 1.1928 High: 1.1939 Low: 1.1910 Close: 1.1927

 

EUR/USD Technical

S1 S2 S1 R1 R2 R3
1.1718 1.1809 1.1915 1.2025 1.2092 1.2235

EUR/USD inched lower in the Asian session and is showing limited movement in European trade

  • 1.1915 was tested earlier in support and is a weak line
  • 1.2025 is the next resistance line

Further levels in both directions:

  • Below: 1.1915, 1.1809, 1.1718 and 1.1613
  • Above: 1.2025, 1.2092 and 1.2235
  • Current range: 1.1915 to 1.2025

OANDA’s Open Positions Ratio

EUR/USD ratio is showing movement towards short positions. Currently, long positions have a small majority (51%), indicative of a lack of trader bias towards EUR/USD.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.