EUR/USD – Euro ticks higher, Eurozone trade surplus slips

EUR/USD continues to have an uneventful week. Currently, the pair is trading at 1.1212, up 0.08% on the day. On the release front, the eurozone trade surplus narrowed to EUR 17.9 billion in March, down from 19.5 billion a month earlier. This was well short of the estimate of EUR 19.0 billion. It’s a busy day in the U.S., with the release of building permits, unemployment claims and the Philly Fed Manufacturing Index. On Wednesday, the eurozone releases consumer spending reports, while the U.S. posts UoM Consumer Sentiment.

The eurozone economy has been struggling, and even the German locomotive has shown signs of weakness. The manufacturing sectors have been hit particularly hard, as the global trade war has dampened the appetite for German and European exports. The U.S. and China have been holding talks to diffuse trade tensions, but President Trump slapped new tariffs on Chinese products and China quickly responded with counter-tariffs. Investors are worried if the trade war escalates, Trump could target European cars made in China, which would hurt the massive German auto sector. This has led to sharp losses for German automaker listings on the DAX, which include BMW, Daimler and Volkswagen. On Wednesday, the U.S. announced a 6-month moratorium on tariffs on European and Japanese vehicles, but investors will likely remain nervous that the U.S. could impose further trade sanctions against China.

There was positive news from first-quarter GDP data in the eurozone.German Preliminary GDP improved to 0.4% in the first quarter, after a flat zero reading in Q4 of 2018. In the eurozone, Flash GDP also climbed to 0.4% in the first quarter, up from 0.2% in Q4. It’s too early to tell, but if key indicators follow suit and head upwards, sentiment towards the eurozone will improve and likely boost the euro.

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EUR/USD Fundamentals

Thursday (May 16)

• 4:15 German Buba President Weidmann Speaks
• 5:00 Eurozone Trade Balance. Estimate 19.0B. Actual 17.9B
  
• 5:04 Italian Trade Balance. Estimate 4.24B. Actual 4.63B
• All  Day – Eurogroup Meetings
• 8:30 US Building Permits. Estimate 1.29M
• 8:30 US Unemployment Claims. Estimate 220K
• 8:30 US Philly Fed Manufacturing Index. Estimate 10.0
• 8:30 US Housing Starts. Estimate 1.21M
• 10:30 US Natural Gas Storage. Estimate 105B
• 12:15 US FOMC Member Brainard Speaks

Friday (May 17)

• 5:00 Eurozone Final CPI. Estimate 1.7%
• 5:00 Eurozone Final Core CPI. Estimate 1.2%
• 10:00 US Preliminary UoM Consumer Sentiment. Estimate 97.8

*All release times are DST

*Key events are in bold

EUR/USD for Thursday, May 16, 2019

EUR/USD for May 16 at 6:45 DST

Open: 1.1202 High: 1.1224 Low: 1.1202 Close: 1.1209

EUR/USD Technical

EUR/USD posted slight gains in the Asian session and is showing limited movement in European trade

• 1.1120 is providing support
• 1.1212 is fluid. It is under pressure in resistance
• Current range: 1.1120 to 1.1212

Further levels in both directions:

• Below: 1.1120, 1.1046 and 1.0950
• Above: 1.1212, 1.1300, 1.1434 and 1.1553

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