EUR/USD – Euro Steady As German Retail Sales Shine

EUR/USD is trading comfortably above the 1.37 line in Friday trade. Taking a look at today’s releases, it’s a full day on both sides of the Atlantic. In the Eurozone, German Retail Sales jumped 2.5%, its best showing in almost a year. The Italian unemployment rate rose in January and was higher than the estimate. The markets are keeping a close eye on Eurozone Flash Estimate CPI, a key event. In the US, there are three key events – Preliminary GDP, Chicago PMI, and Pending Home Sales.

It’s been all smiles for German numbers this week. On Friday, Retail Sales jumped 2.5%, crushing the estimate of 1.2%. German GfK Consumer Climate continues to rise, as the key indicator moved upwards for a fourth straight month. Earlier in the week, German Ifo Business Climate and Unemployment Change declined by 14 thousand, its third straight decline. With the ECB under pressure to take action and boost the sputtering Eurozone economy, good news from Germany, the largest economy in the bloc, is especially welcome. Meanwhile, the data out of other major Eurozone members was much worse. French Consumer Spending declined by 2.1%, its worst showing in almost two years, and well off the estimate of -0.8%. Italian Quarterly Unemployment jumped to 12.6%, up from 12.3% the month before. The estimate stood at 12.4%.

Federal Reserve Chair Janet Yellen testified on Thursday before a Senate committee. As expected, Yellen said that the Fed remains committed to tapering QE and would like to wind up the bond-buying scheme by the fall. At the same time, she acknowledged the string of weak US releases recently and said that the Fed would closely monitor to what extent the weak numbers are due to cold weather and what portion can be attributed to a “softer outlook”. The next Fed policy meeting takes place in mid-March and the markets will be expecting another $10 billion cut to QE.

Thursday was a mix for US key releases. Manufacturing data looked strong, as Core Durable Goods Orders jumped 1.1% in January. This surprised the markets, which had expected a decline of -0.1%. However, Unemployment Claims did not look as sharp, as the key indicator rose to 348 thousand, well above the estimate of 333 thousand. Meanwhile, a nasty streak of weak US releases ended on Wednesday as New Home Sales jumped by 468 thousand, crushing the estimate of 406 thousand. It was the housing indicator’s best showing since last June, and helped allay concerns about the health of the housing sector, following weak housing numbers last week. We’ll get another look at key housing data on Friday, with the release of  Pending Home Sales. The markets anticipate a strong gain after a miserable reading in December.

EUR/USD for Friday, February 28, 2014

EUR/USD February 28 at 12:25 GMT

EUR/USD 1.3721 H: 1.3625 L: 1.3694

EUR/USD Technical

• EUR/USD has edged higher on Friday and is showing some upward movement in the European session.
• On the downside, 1.3649 is providing solid support. The next support line is at 1.3585.
• 1.3786 is the next line of resistance. This is followed by resistance at 1.3893, which is protecting the 1.39 level.
• Current range: 1.3649 to 1.3786

Further levels in both directions:

• Below: 1.3649, 1.3585, 1.3410, 1.3347 and 1.3255
• Above: 1.3786, 1.3893, 1.4000 and 1.4149.

OANDA’s Open Positions Ratio

EUR/USD ratio is pointing to gains in short positions on Friday. This is not consistent with the pair’s current movement, as the euro has posted slight against the dollar. Short positions retain a strong majority, indicative of trader bias towards the dollar continuing to move to higher ground.

The euro is steady in Friday trading. We could see some movement from EUR/USD after the release of Eurozone CPI and key releases out of the US later in the day.

EUR/USD Fundamentals

• 7:00 German Retail Sales. Estimate 1.2%. Actual 2.5%.
• 7:45 French Consumer Spending. Estimate -0.8%. Actual -2.1%.
• 9:00 Italian Monthly Unemployment Rate. Estimate 12.7%. Actual 12.9%.
• 9:00 Italian Quarterly Unemployment Rate. Estimate 12.4%. Actual 12.6%.
• 10:00 Eurozone CPI Flash Estimate. Estimate 0.7%.
• 10:00 Eurozone CPI Unemployment Rate. Estimate 12.0%.
• 10:00 Italian Preliminary CPI. Estimate 0.5%.
• 10:00 US FOMC Member Richard Fisher Speaks.
• 13:30 US Preliminary GDP. Exp. 2.6%.
• 13:30 US Preliminary GDP Price Index. Exp. 1.3%.
• 14:45 US Chicago PMI. Exp. 57.9 points.
• 14:55 US Revised UoM Consumer Sentiment. Exp. 81.4 points.
• 14:55 US Revised UoM Inflation Expectations.
• 15:00 US Pending Home Sales. Exp. 2.9%.
• 15:15 US FOMC Member Narayana Kocherlakota Speaks.
• 15:15 US FOMC Member Jeremy Stein Speaks.

*Key releases are highlighted in bold

*All release times are GMT

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.