EUR/USD – Euro shrugs as Trump fires next tariff salvo

EUR/USD is unchanged in the Tuesday session. Currently, the pair is trading at 1.1683, up 0.01% on the day. It’s another quiet day on the data front, with no Eurozone indicators. In the U.S, there are two minor events which are unlikely to affect EUR/USD. On Wednesday, the U.S releases building permits and housing starts.

There was rampant speculation that another round of tariffs in the U.S-China trade war was in the offing, and President Trump has delivered the goods. On Monday, Trump imposed tariffs of 10% on some $200 billion worth of Chinese goods and threatened further action if China retaliated. Why did the currency markets not react? Investors were braced for a move by Trump, and may be sighing in relief that the tariff was set at 10% rather than at 25%. One senior economist summed up Trump’s most recent salvo as “bad but manageable”. However, if the Chinese retaliate and the U.S takes further measures, this would likely shake up the currency markets and boost the U.S dollar.

In the U.S, last week’s consumer spending and inflation data was a disappointment. Retail sales in August dropped to 0.1%, down from 0.5% a month earlier. This missed the estimate of 0.4%. Core retail sales followed a similar trend, falling from 0.6% to 0.3%. It missed the forecast of 0.5%. These key consumer spending numbers come on the heels of CPI, which came in at just 0.2% and missed the estimate of 0.3%. There was better news from UoM Consumer Sentiment in September, which jumped to 100.8, above the estimate of 96.7 points, This marked the first time that the indicator cracked the 100-level since March.

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Seeing the forest for the trees

EUR/USD Fundamentals

Tuesday (September 18)

• 3:15 ECB President Draghi Speaks
• 10:00 US NAHB Housing Market Index. Estimate 66
• 16:00 US TIC Long-Term Purchases. Estimate 65.1B

Wednesday (September 19)

• 8:30 US Building Permits. Estimate 1.31M
• 8:30 US Housing Starts. Estimate 1.24M
• 9:00 ECB President Draghi Speaks

*All release times are DST

*Key events are in bold

EUR/USD for Tuesday, September 18, 2018

EUR/USD for September 18 at 4:30 DST

Open: 1.1682 High: 1.1718 Low: 1.1667 Close: 1.1683

EUR/USD Technical

EUR/USD edged higher in the Asian session but has retracted in European trade

• 1.1637 is providing support
• 1.1718 was tested earlier in resistance. It is a weak line

Further levels in both directions:

• Below: 1.1637, 1.1553, 1.1434 and 1.1312
• Above: 1.1718, 1.1840 and 1.1961
• Current range: 1.1637 to 1.1718

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