EUR/USD – Euro dips as German economic sentiment slides

EUR/USD has posted losses in the Tuesday session. Currently, the pair is trading at 1.1719, down 0.28% on the day. On the release front, German ZEW Economic Sentiment dropped to -24.7, a sharper drop than expected. The forecast stood at -17.9 points. Eurozone ZEW Economic Sentiment followed a similar trend, dropping to -18.7 points. This reading was weaker than the estimate of -13.2 points. The U.S releases JOLTS Jobs Openings, which is expected to improve to 6.88 million. On Wednesday, U.S Core CPI and CPI are both expected to drop by 0.2%.

The economic outlook for the eurozone appears cloudy, according to the latest ZEW Economic Sentiment indicators. The German and eurozone releases both dropped to their lowest levels since August 2012. The surveys indicate the views of financial experts, who are clearly concerned about the economic outlook for the next six months. Internal divisions over migration and fears over a full-blown global trade war have investors worried that the eurozone could be heading into significant headwinds, which could send the euro downwards.

U.S employment data was a mix on Friday, as job growth remained above the 200-thousand level, but wage growth faltered. Nonfarm payrolls dropped to 213 thousand, but this beat the estimate of 195 thousand. Average Hourly Earnings edged lower to 0.2%, shy of the estimate of 0.3%. There was a surprise as the unemployment rate climbed to 4.0%, above the forecast of 3.8%. The data demonstrates that the U.S labor market remains strong, and the economy continues to perform well. The markets remain bullish on U.S growth, despite uncertainty in Europe and elsewhere, as well as the growing threat of an all-out trade war between the U.S and China.

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EUR/USD Fundamentals

Tuesday (July 10)

• 2:45 French Industrial Production. Estimate 0.7%. Actual -0.2%
• 4:00 Italian Industrial Production. Estimate 0.9%. Actual 0.7%
• 5:00 German ZEW Economic Sentiment. Estimate -17.9. Actual -24.7
• 5:00 Eurozone ZEW Economic Sentiment. Estimate -13.2. Actual -18.7
• 6:00 US NFIB Small Business Index. Estimate 105.6. Actual 107.2
• 10:00 US JOLTS Job Openings. Estimate 6.88M

Wednesday (July 11)

• 3:00 ECB President Mario Draghi Speaks
• Tentative – German 10-year Bond Auction
• 8:30 US Core PPI. Estimate 0.2%
• 8:30 US PPI. Estimate 0.2%
• 10:00 US Final Wholesale Inventories. Estimate 0.5%
• 10:30 US Crude Oil Inventories
• 12:30 US FOMC Member Rafael Bostic Speaks
• 13:01 US 10-year Bond Auction
• 16:30 US FOMC Member John Williams Speaks

*All release times are DST

*Key events are in bold

EUR/USD for Tuesday, July 10, 2018

EUR/USD for July 10 at 6:25 DST

Open: 1.1752 High: 1.1763 Low: 1.1715 Close: 1.1725

EUR/USD Technical

EUR/USD was flat for most of the Asian session and has edged lower in European trade

• 1.1637 is providing support
• 1.1728 is fluid. Currently, it is a weak resistance line

Further levels in both directions:

• Below:  1.1637, 1.1553 and 1.1434
• Above: 1.1728, 1.1829, 1.1910 and 1.2026
• Current range: 1.1637 to 1.1728

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