EUR/USD – Lack of fundamental releases leaves euro subdued

EUR/USD continues to gain ground this week. In Tuesday trade, the pair is trading at 1.1432, up 0.03% on the day. On the release front, there are on eurozone or German releases. In the U.S. the key event is CB Consumer Confidence, which is expected to drop to 125.0 points. On Wednesday, Germany releases Preliminary CPI and the Federal Reserve will publish its monthly rate statement.

As the largest economy in the eurozone, Germany is a bellwether for the rest of the bloc. Recent German numbers have been weak, raising concerns about the strength of the eurozone economy. On Friday, German Ifo Business Climate dipped to 99.1, below the 100-level for the first time since 2010. Earlier in the week, a ZEW survey found that institutional investors remain deeply pessimistic about the German and eurozone economies. There was also grim news from the manufacturing front, as German manufacturing PMI slipped to 49.9, falling into contraction territory for the first time since 2013.

On Monday, ECB President Mario Draghi painted a mixed picture in his testimony before a EU parliamentary committee. Draghi highlighted serious concerns affecting the eurozone. Draghi pointed to uncertainties over geopolitical factors and  protectionism threats continued to weigh on the eurozone economy. On the bright side, Draghi noted that an improving labor market and stronger inflation were fueling expansion in the eurozone. At last week’s policy meeting, the ECB said that risks to growth have “moved to the downside”. This pessimistic comments were result of weaker eurozone releases in recent weeks. The economy has slowed, as weaker growth in China and trade tensions, such as Brexit, have dampened business and consumer confidence.

How many times will the Fed raise rates in 2019? The answer varies, depending on who you ask. The markets are not expecting any increases, while the Federal Reserve continues to stick with a forecast of two hikes. The Congressional Budget Office (CBO) has also weighed in, saying that it expects further rate increases this year. The CBO made the forecast in its 10-year outlook update, but did not specify how many hikes. The CBO report projected growth of 2.3% for the U.S economy in 2019, matching the forecast of the Federal Reserve.

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EUR/USD Fundamentals

Tuesday (January 29)

• 3:00 Spanish Unemployment Rate. Estimate 14.5%. Actual 14.5%
• 9:00 U.S S&P/CS Composite-20 HPI. Estimate 5.0%
• 10:00 US CB Consumer Confidence. Estimate 125.0

Wednesday (January 30)

• 2:00 German GfK Consumer Climate. Estimate 10.3
• 2:00 German Import Prices. Estimate -0.8%
• All Day – German Preliminary CPI. Estimate -0.7%
• 8:15 US ADP Nonfarm Employment Change. Estimate 170K
• 14:00 US FOMC Statement
• 14:00 US Federal Funds Rate. Estimate <2.50%
• 14:30 US FOMC Press Conference

*All release times are EST

*Key events are in bold

EUR/USD for Tuesday, January 29, 2019

EUR/USD for January 29 at 6:25 EST

Open: 1.1428 High: 1.1450 Low: 1.1421 Close: 1.1431

EUR/USD Technical

EUR/USD was mostly flat in the Asian session and has ticked higher in European trade

• 1.1300 is providing support
• 1.1434 remains fluid. Currently, it is a weak resistance line
• Current range: 1.1300 to 1.1434

Further levels in both directions:

• Below: 1.1300, 1.1212 and 1.1120
• Above: 1.1434, 1.1553, 1.1685 and 1.1803

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