EUR/USD – Euro Flat as Markets Look for Economic Cues

The euro is almost unchanged on Wednesday, as EUR/USD trades at 1.1270. On the economic front, it’s a quiet day, with no Eurozone releases. In the US, today’s highlight is the FOMC minutes from the Fed’s July policy meeting. There are three key releases on Thursday, as the Eurozone releases CPI, while the US publishes the Philly Fed Manufacturing Index and Unemployment Claims.

Germany and the Eurozone released August ZEW Economic Sentiment reports on Tuesday, but market forecasts missed on both accounts. The German indicator posted a small gain of 0.5 points, well short of the forecast of 2.1 points. The Eurozone report was surprisingly strong, coming in at 4.6 points. This crushed the estimate of -6.3 points. The good news is that both indicators rebounded nicely after recording declines in July. At the same time, the current readings pale in comparison to the June readings, which hovered around the 20-point level. There are serious concerns that third quarter data, which covers the period immediately after the Brexit referendum vote in late June, will show weaker growth in the Eurozone. This could put more pressure on the ECB to step in and adopt further easing measures in order to kick-start the economy and boost inflation. We’ll get a look at Eurozone Final CPI on Thursday, with the estimate standing at just 0.2%.

US inflation levels continue to flounder, as underscored by July’s consumer inflation reports. CPI posted a weak reading of 0.0%, its worst showing in five months. Core CPI dropped to 0.1%, shy of the estimate of 0.2%. Wednesday’s highlight is the Federal Reserve minutes, which will provide details of the Fed’s July policy meeting. However, the minutes could prove to be a non-event, since there have been a host of key releases since the July meeting. Problem is, the data is pointing in all directions, making it a tricky task to try and figure out when the Fed might raise interest rates. After a soft GDP report in late July, nonfarm payrolls was stellar. However, this was followed by weak retail sales and CPI numbers. Bottom line? A September hike is virtually off the table, while the odds of a December hike are pegged at 50/50. However, Fed policymakers will be hesitant to raise rates if key indicators, particularly inflation levels, remain at such levels.

EUR/USD Fundamentals

Wednesday (August 17)

• 14:30 US Crude Oil Inventories. Estimate 0.3M
• 17:00 FOMC Member James Bullard Speaks
• 18:00 US FOMC Meeting Minutes

Thursday (August 18)

• 9:00 Eurozone Final CPI. Estimate 0.2%
• 12:30 US Philly Fed Manufacturing Index. Estimate 1.4
• 12:30 US Unemployment Claims. Estimate 269K

* Key releases are in bold

*All release times are GMT

EUR/USD for Wednesday, August 17, 2016

EUR/USD August 17 at 9:30 GMT

Open: 1.1276 High: 1.1290 Low: 1.1254 Close: 1.1268

EUR/USD Technical

• EUR/USD was flat in the Asian session and has recorded small losses in the European session
•  1.1278 was tested in resistance earlier and is a weak line
•  1.1150 has strengthened in support after strong gains by EUR/USD in the Tuesday session

Further levels in both directions:

• Below: 1.1150, 1.1054, 1.0925 and 1.0821
• Above: 1.1278, 1.1376 and 1.1467
• Current range: 1.1150 to 1.1278

OANDA’s Open Positions Ratio

EUR/USD ratio has shown gains in short positions. Currently, short positions have a strong majority (63%), indicative of trader bias towards EUR/USD continuing to move to lower levels.

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.