EUR/USD – Euro steady as German inflation within expectations

EUR/USD is drifting in the Tuesday session. Currently, the pair is trading at 1.1761, up 0.12% on the day. On the release front, German Wholesale Price Index jumped 0.3%, edging above the estimate of 0.2%. In the U.S, today’s key indicator is CB Consumer Confidence, which is expected to climb to 132.2 points. On Wednesday, the spotlight will be on the Federal Reserve, which is likely to raise rates to a range between 2.00% and 2.25%.

The euro punched past the 1.18 line on Monday. This followed hawkish remarks from ECB President Mario Draghi, who was testifying before the European Parliament Economic and Monetary Affairs Committee. Draghi said there had been a “relatively vigorous pick-up in underlying inflation”. With regard to the ECB’s forward guidance, Draghi said that the ‘”through the summer of 2019″ was a timeline in which conditions warrant a first rate increase. This means that the September meeting will be a live meeting, with many analysts predicting a rate hike in December.

Trade tensions have escalated this week, with the U.S and China slapping tariffs on each other. On Monday, the U.S imposed tariffs on some $200 billion worth of Chinese goods, while China responded with tariffs of $60 billion on U.S products. There may be more headwinds ahead, as China sharply attacked the U.S, saying it had plunged “a knife to China’s neck” with the new tariffs. The Chinese have canceled trade talks with the Trump administration, and no new talks are likely to be held until the mood improves between the world’s two largest economies. Previous rounds of tariffs between the two economic giants have boosted the U.S dollar, but so far, investors have reacted calmly and have not dumped their euro assets in favor of the greenback.

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EUR/USD Fundamentals

Tuesday (September 25)

• 2:00 German WPI. Estimate 0.2%. Actual 0.3%
• 9:00 US HPI. Estimate 0.2%
• 9:00 US S&P/CS Composite-20 HPI. Estimate 6.2%
• 10:00 US Consumer Confidence. Estimate 132.2
• 10:00 US Richmond Manufacturing Index. Estimate 22

Wednesday (September 26)

• 10:00 US New Home Sales. Estimate 630K
• 10:30 US Crude Oil Inventories
• 14:00 US FOMC Economic Projections
• 14:00 US FOMC Statement
• 14:00 US Federal Funds Rate. Estimate <2.25%
• 14:30 FOMC Press Conference

*All release times are DST

*Key events are in bold

EUR/USD for Tuesday, September 25, 2018

EUR/USD for September 25 at 5:00 DST

Open: 1.1746 High: 1.1745 Low: 1.1731 Close: 1.1761

EUR/USD Technical

EUR/USD was flat for most of the Asian session. In European trade, the pair posted slight gains but then retracted

• 1.1718 is providing support
• 1.1840 is the next resistance line

Further levels in both directions:

• Below: 1.1718, 1.1637, 1.1553 and 1.1434
• Above: 1.1840, 1.1961 and 1.2055
• Current range: 1.1718 to 1.1840

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