EUR/USD – Euro steady as Eurozone CPI estimate close to estimate

EUR/USD is showing little movement in the Friday session. Currently, the pair is trading at 1.1661, up 0.08% on the day. On the release front, German retail sales came in at -0.4%, missing the estimate of -0.1%. This marked the second decline in three months. On the inflation front, Eurozone CPI Estimate was within expectations. In the U.S, the key event is UoM Consumer Sentiment, which is expected to drop to 95.5 points.

Eurozone inflation is expected to dip lower in August. CPI Flash Estimate dropped from 2.1% to 2.0%, shy of the estimate of 2.1%. Core CPI is also forecast to tick lower to 1.0%, missing the estimate of 1.1%. Earlier in the week, German Preliminary CPI rose 1.9% in August (year-on-year), down from 2.1% a month earlier. These releases were within expectations, and the slight easing in inflation is unlikely to change plans at the ECB. The central bank is scheduled to wrap up its EUR 2.6 trillion asset-purchase scheme in December. However, it’s unclear when the ECB will raise interest rates. ECB policymakers have been somewhat vague on the issue, saying that rates will not rise until after next summer. Some analysts have circled October 2019 as a possible date for the first ECB rate hike in years.

The trade spat between the US and China may have take a pause, but investors remain jittery. The trade war has taken a bite out of Chinese exports, as the “new export order” subindex in China’s official PMI dropped below 50 in August, the third straight month that the index has contracted. President Trump has threatened to slap additional tariffs on some $200 billion of Chinese products, a move which could take place as early as next week. Further tariffs would have a damaging effect on the Chinese economy, and it’s likely that China would respond in kind. The current trade spat has already seen the U.S dollar gain ground against rivals such as the euro, and fears of a global trade war could see the greenback make further gains.

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EUR/USD Fundamentals

Friday (August 31)

• 2:00 German Retail Sales. Estimate -0.1%. Actual -0.4%
• 2:45 French Preliminary CPI.  Estimate 0.5%. Actual 0.5%
• 4:00 Italian Monthly Unemployment Rate. Estimate 10.8%. Actual 10.4%
• 5:00 Eurozone CPI Flash Estimate. Estimate 2.1%
• 5:00 Eurozone Core CPI Flash Estimate. Estimate 1.1%
• 5:00 Italian Preliminary CPI. Estimate 0.2%
• 5:00 Eurozone Unemployment Rate. Estimate 8.2%
• 9:45 US Chicago PMI. Estimate 63.0
• 10:00 US Revised UoM Consumer Sentiment. Estimate 95.5
• 10:00 US Revised UoM Inflation Expectations

*All release times are DST

*Key events are in bold

EUR/USD for Friday, August 31, 2018

EUR/USD for August 31 at 5:10 DST

Open: 1.1669 High: 1.1691 Low: 1.1660 Close: 1.1661

EUR/USD Technical

EUR/USD was mostly flat during the Asian session. In European trade, the pair edged higher but has retracted

• 1.1637 is providing support
• 1.1718 is the next resistance 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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