EUR/USD – Euro climbs to 2-week high as Democrats recapture House

EUR/USD has posted considerable gains in the Wednesday session. Currently, the pair is trading at 1.1494, up 0.59% on the day. On the release front, German industrial production posted a gain of 0.2%, above the estimate of 0.0%. Eurozone retail sales improved to 0.0%, shy of the estimate of 0.1%. There are no major releases out of the United States. On Thursday, Germany releases trade balance and the eurozone publishes its economic forecasts. In the U.S, the Federal Reserve will release a rate statement. We’ll also get a look at unemployment claims.

It’s been a positive week for German manufacturing data. On Wednesday, industrial production ended a nasty streak of three straight declines, with a modest gain of 0.2%. A day earlier, factory production rebounded with a gain of 0.3%, beating the forecast of -0.4%. The eurozone economy slowed down in the third quarter to 1.7%, compared to 2.2% in the second quarter. If the economy is to rebound in Q4, Germany, the locomotive of the eurozone, will have to lead the way with stronger data.

Participation was high in the mid-term elections on Tuesday, and voters rendered a split-decision. The Democrats regained control of the House of Representatives for the first time since 2010, but the Republicans maintained control of the Senate, and have increased their majority. The results are a setback for President Trump, as the Democrats will be in a stronger position to derail Trump’s plans to boost fiscal stimulus and lower taxes. Investors have reacted on Wednesday by sending the dollar lower. The euro faces its next major test on Thursday, when the Federal Reserve releases its monthly rate statement. The Fed is expected to maintain the benchmark rate at a range of between 2.0% and 2.25%.

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EUR/USD Fundamentals

Wednesday (November 7)

• 2:00 German Industrial Production. Estimate 0.0%. Actual 0.2%
• 4:00 Italian Retail Sales. Estimate -0.1%. Actual -0.8%
• 5:00 Eurozone Retail Sales. Estimate 0.1%. Actual 0.0%
• Tentative – German 10-year Bond Auction
• 10:30 US Crude Oil Inventories. Estimate 2.0M
• 13:01 US 30-year Bond Auction
• 15:00 US Consumer Credit. Estimate 15.7B

Thursday (November 8)

• 2:00 German Trade Balance. Estimate 18.2B
• 4:00 ECB Economic Bulletin
• 5:00 EU Economic Forecasts
• 8:30 US Unemployment Claims. Estimate 214K
• 14:00 US FOMC Statement
• 14:00 US Federal Funds Rate. Estimate <2.25%

*All release times are DST

*Key events are in bold

EUR/USD for Wednesday, November 7, 2018

EUR/USD for November 7 at 6:25 EST

Open: 1.1427 High: 1.1500 Low: 1.1395 Close: 1.1494

EUR/USD Technical

EUR/USD edged higher in the Asian session. In European trade, the pair dipped lower but has reversed directions and gained ground

• 1.1434 is providing support
• 1.1553 is the next resistance line
• Current range: 1.1434 to 1.1553

Further levels in both directions:

• Below: 1.1434,  1.1300, 1.1212 and 1.1120
• Above: 1.1553, 1.1685 and 1.1800

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