EUR/USD – Euro dips as Eurozone retail sales sag

EUR/USD is showing slight movement in the Tuesday session. Currently, the pair is trading at 1.1414, down 0.20% on the day. After a quiet start to the week, it’s a busy day for fundamentals. German Services PMI improved to 53.1, while eurozone Services PMI remained steady at 51.2 points. Eurozone retail sales plunged 1.6%, its worst showing since December 2013. In the U.S, the key event is ISM Non-manufacturing PMI, which is expected to dip to 57.2 points. Later on Tuesday, President Trump delivers the State of Union address before Congress. On Wednesday, Germany releases factory orders.

Eurozone data was mixed on Tuesday. German Services PMI improved to 53.1, but the eurozone reading of 51.2 pointed to stagnation in the eurozone services sector. Retail sales ended the year with a whimper, as December releases headed south. Eurozone retail sales dropped 1.6%, and German retail sales plunged 4.3% last week, its sharpest decline in more than 12 years. On the manufacturing front, German manufacturing PMI for January dipped to 49.7, below the 50-point level which separates contraction and expansion. This was the weakest score since October 2014. Trade tensions and weakness in the German auto sector continue to weigh on the manufacturing sector. Weakness in manufacturing can be seen across the eurozone, as France and Italy both posted PMIs in contraction territory.

In the U.S., the week ended with mixed employment numbers. The economy created 304 thousand jobs, crushing the estimate of 165 thousand. This was the second score above the 300-thousand mark for a second successive month. However, wage growth was a disappointment, dropping from 0.4% to 0.1%. This fell shy of the estimate of 0.3% and marked the weakest reading since April 2018. Despite the sparkling non-farm payrolls, the dollar was unable to make any gains against the euro, as dollar bulls focused on the weak wage growth numbers. As well, enthusiasm for the greenback was dampened by the dovish message from the Fed in its first monetary policy update of 2019. Fed chair Powell reinforced the sentiment that the Fed will ease up on rate policy, saying the central bank would be “patient” regarding future rate hikes.

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EUR/USD Fundamentals

Tuesday (February 5)

• 3:15 Spanish Services PMI. Estimate 53.1. Actual 54.7
• 3:15 Italian Services PMI. Estimate 50.0. Actual 49.7
• 3:50 French Services PMI. Estimate 47.5. Actual 47.8
• 3:55 German Final Services PMI. Estimate 53.1. Actual 53.0
• 4:00 Eurozone Final Services PMI. Estimate 50.8. Actual 51.2
• 5:00 Eurozone Retail Sales. Estimate -1.5%. Actual -1.6%
  
• 9:45 US Final Services PMI. Estimate 54.2
• 10:00 US ISM Non-Manufacturing PMI. Estimate 57.2
• 21:00 US President Trump State of the Union Address
• Tentative – US IBD/TIPP Economic Optimism. Estimate 53.1

Wednesday (February 6)

• 2:00 German Factory Orders. Estimate 0.3%
• 19:00 Fed Chair Powell Speaks

*All release times are EST

*Key events are in bold

EUR/USD for Tuesday, February 5, 2019

EUR/USD for February 5 at 6:20 EST

Open: 1.1438 High: 1.1441 Low: 1.1412 Close: 1.1414

EUR/USD Technical

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

• 1.1300 is providing support
• 1.1434 was tested in resistance earlier in the day. It remains a weak 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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