EUR/USD – Euro edges higher, German consumer inflation next

EUR/USD has posted gains on Friday. Currently, the pair is trading at 1.1154, up 0.22% on the day. On the release front, German consumer data is in focus. Retail sales declined by 2.0% in April, much worse than the estimate of a 0.4% gain. Later in the day, Germany releases CPI, with an estimate of 0.3%. It’s a busy day in the U.S, with consumer data also in the spotlight. The Federal Reserve’s preferred inflation gauge, Core PCE Price Index, is expected to improve to 0.2%. However, personal spending is projected to slow to 0.2%, after a strong gain of 0.9% in the previous release.

Is the German locomotive slowing down? The normally strong labor market shocked investors as unemployment rolls soared by 60,000. This was the first gain in almost two years. There was more negative news on Friday, as retail sales fell 2.0%, its sharpest drop since January. German inflation is next, with Preliminary CPI projected to slow to 0.3% in May, after a strong gain of 1.0% in April.

The U.S. economy continues to perform well, with first-quarter growth above the 3% level. Second estimate GDP posted a gain of 3.1%, matching the estimate. This was just shy of the initial estimate in April, which came in at 3.1%. The U.S. economy is firing on all cylinders, despite the nasty trade war with China, which has escalated in recent weeks. U.S. officials, including President Trump, had announced that substantial progress had been made, and it seemed that a trade deal was just around the corner. However, Trump shocked the markets by slapping further tariffs on China, which led to counter-tariffs against U.S. products. China has reacted angrily to U.S. trade sanctions on Huawei, a giant Chinese telecom company. The euro has managed to weather the latest crisis in the U.S.-China trade war, but if there is no improvement, investors could opt for the safety of the greenback, at the expense of the euro.

Trade War Selling Takes a Breather

China manufacturing PMI drops below 50 again

EUR/USD Fundamentals

Friday (May 31)

• 2:00 German Retail Sales. Estimate 0.4%. Actual -2.0%
  
• All Day – German Preliminary CPI. Estimate 0.3%
• 5:00 Italian Preliminary CPI. Estimate 0.2%
• 8:30 US Core PCE Price Index. Estimate 0.2%
• 8:30 US Personal Spending. Estimate 0.2%
• 8:30 US Personal Income. Estimate 0.3%
• 9:45 US Chicago PMI. Estimate 55.1
• 10:00 US Revised UoM Consumer Sentiment. Estimate 102.0
• 10:00 US Revised UoM Inflation Expectations
• 12:00 US FOMC Member William Speaks

*All release times are DST

*Key events are in bold

EUR/USD for Friday, May 31, 2019

EUR/USD for May 31 at 6:20 DST

Open: 1.1129 High: 1.1155 Low: 1.1125 Close: 1.1154

EUR/USD Technical

In the Asian session, EUR/USD posted small gains but then retracted. The pair has edged higher in European trade

• 1.1120 is providing support
• 1.1212 is the next resistance line
• 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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