EUR/USD – Euro jumps as EU announces migration agreement

EUR/USD has posted strong gains in the Friday session. Currently, the pair is trading at 1.1637, up 0.58% on the day. On the release front, German retail sales plunged 2.1%, well off the estimate of -0.5%. Eurozone CPI Flash Estimate came in at 2.0%, matching the estimate. Core CPI Flash Estimate also matched expectations, with a gain of 1.0%. In the US, Core PCE Price Index is expected to remain pegged at 0.2% for a fourth straight month, while Personal Spending is forecast to drop to 0.4%. We’ll also get a look at UoM Consumer Confidence, which is forecast to rise to 99.1 points. 

Early Friday, EU leaders announced with great fanfare that they had reached an agreement on the thorny issue of migrants and refugees. The issue had threatened to topple the German government, and countries such as Italy and Hungary were looking to drastically reduce immigration, putting them on a collision course with EU policy. Under the agreement, rescued migrants who are in EU territory will be sent to “control centers” in countries that agree to have them. The main entry point for refugees has been Italy and Greece, and under the agreement, other members will accept some of the migrants. Still, the deal was short on details, and appears to be a stopgap which papers over the deep divisions that still remain in the EU over immigration.

German retail sales resumed its losing ways in May. The sharp decline of 2.1% marked the fifth decline in the past six months and was the steepest drop in 2018. Inflation numbers have also raised concerns, as German Preliminary CPI fell to 0.1%, down from 0.5% a month earlier. Eurozone inflation numbers were stronger, as CPI Flash Estimate and Core CPI Flash Estimate both matched their estimates. Next week, Germany releases PMIs from the manufacturing and services sectors. These indicators have been dropping in recent months, and if this trend continues, the euro could lose ground.

  EUR extends rebound on EU summit deal

EUR/USD Fundamentals

Friday (June 29)

• 2:00 German Retail Sales. Estimate -0.5%. Actual -2.1%
• 2:00 German Import Prices. Estimate 1.0%. Actual 1.6%
• 2:48 French Preliminary CPI. Estimate 0.1%. Actual 0.1%
• 2:48 French Consumer Spending. Estimate 0.8%. Actual 2.9%
• 3:55 German Unemployment Change. Estimate -8K. Actual -15K
• 5:00 Eurozone CPI Flash Estimate. Estimate 2.0%. Actual 2.0%
• 5:00 Eurozone Core CPI Flash Estimate. Estimate 1.0%. Actual 1.0%
• Day 2 – EU Economic Summit
• 8:30 US Core PCE Price Index. Estimate 0.2%
• 8:30 US Core Personal Spending. Estimate 0.4%
• 10:00 US Revised UoM Consumer Sentiment. Estimate 99.1

*All release times are DST

*Key events are in bold

EUR/USD for Friday, June 29, 2018

EUR/USD for June 29 at 6:35 DST

Open: 1.1569 High: 1.1667 Low: 1.1558 Close: 1.1637

EUR/USD Technical

EUR/USD was flat for most of the Asian session but then posted considerable gains. The pair has inched lower in European trade

• 1.1553 is providing support
• 1.1637 was tested earlier in resistance and is under pressure. It could break in the Friday session

Further levels in both directions:

• Below: 1.1553, 1.1434 and 1.1312
• Above: 1.1637, 1.1728, 1.1829 and 1.1910
• Current range: 1.1553 to 1.1637

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