EUR/USD – Euro Edges Lower, Eurozone GDP and CPI Match Estimates

EUR/USD has edged lower in the Monday session, as the pair trades at 1.0940. In the Eurozone, CPI Flash Estimate posted a 0.5% gain and Preliminary Flash GDP climbed 0.3%, as both indicators matched their forecasts. German Retail Sales declined 1.4%, well short of the forecast of +0.2%. The US will release Personal Spending and Chicago PMI. On Tuesday, the US will release ISM Manufacturing PMI.

As the largest economy in the Eurozone, Germany’s economic indicators are closely watched, as they are considered a bellwether of economic activity in the Eurozone economy. Recent numbers have been strong, so the September retail sales was a disappointment. The key indicator declined 1.4%, its weakest level since June 2015. In October, German consumer confidence was lower than expected. GfK Consumer Climate dipped below the symbolic ten-point mark for the first time since May. Business confidence took the opposite direction, as German Ifo Business Climate rose to 110.5 points in October, improving for a second straight month. Earlier in the month, the well-respected ZEW German economic sentiment surveys for Germany also pointed upwards. At the same time, inflation levels remain low and German Preliminary CPI was a weak 0.2%.

US Advance GDP jumped 2.9 percent, and the rosy number will be great news for Fed policymakers who want to raise rates in December. Currently, a hike is priced in at impressive 72 percent. The US economy remains strong, buoyed by a labor market that is close to capacity, with unemployment at a healthy 5.0%. Inflation levels, however, remain low and are unlikely to show much improvement in the next few months. Although the Fed would prefer stronger inflation, other economic indicators remain strong enough such that the lack of inflation is unlikely to be the critical factor in the Fed rate decision. The Fed will also hold a policy meeting in early November, but is unlikely to make any rate moves just before the US presidential election.

EUR/USD Fundamentals

Monday (October 31)

• 7:00 German Retail Sales. Estimate 0.2%. Actual -1.4%
• 10:00 – Eurozone CPI Flash Estimate. Estimate 0.5%. Actual 0.5%
• 10:00 Eurozone CPI Core Flash Estimate. Estimate 0.8%. Actual 0.8%
• 10:00 Eurozone Preliminary Flash GDP. Estimate 0.3%. Actual 0.3%
• 10:00 Italian Preliminary CPI. Estimate 0.2%. Actual 0.0%
• 12:30 US Core PCE Price Index. Estimate 0.1%
• 12:30 US Personal Spending. Estimate 0.5%
• 12:30 US Personal Income. Estimate 0.3%
• 13:45 US Chicago PMI. Estimate 54.1
• Tentative –  US Loan Officer Survey

Tuesday (November 1)

• 14:00 US ISM Manufacturing PMI. Estimate 51.8

*All release times are EDT

* Key events are in bold

EUR/USD for Monday, October 31, 2016

EUR/USD October 31 at 11:40 GMT

Open: 1.0982 High: 1.0982 Low: 1.0948 Close: 1.0954

EUR/USD Technical

• EUR/USD has posted slight losses in the Asian and European sessions
• 1.0821 is a strong support line
• 1.0957 was tested earlier in resistance and remains under pressure

Further levels in both directions:

• Below: 1.0821, 1.0708 and 1.0616
• Above: 1.0957, 1.1054, 1.1150 and 1.1278
• Current range: 1.0821 to 1.0957

OANDA’s Open Positions Ratio

EUR/USD ratio is almost unchanged in the Monday session. Currently, long positions have a strong majority (58%), indicative of trader bias towards EUR/USD reversing directions and moving to higher ground.

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.