EUR/USD – Euro ticks lower, investors await German CPI

EUR/USD is showing little movement in the Thursday session. Currently, the pair is trading at 1.1695, down 0.11% on the day. On the release front, German Preliminary CPI is expected to dip to 0.1%. The US will release key consumer spending and inflation reports, as well as unemployment claims. On Friday, Germany releases retail sales and the eurozone publishes CPI Estimate. In the U.S, the key event is UoM Consumer Sentiment, which is expected to drop to 95.5 points.

The U.S economy continues to fire on all cylinders. GDP for Q2 was revised upwards to 4.2%, edging above the estimate of 4.0%. This reading was above the initial GDP release of 4.1% back in July. Growth in the second quarter was much stronger than in Q1, which posted a gain of 2.2%. Will the strong data continue in the third quarter? Consumer spending has been strong early in the quarter, but housing data has disappointed, with recent key indicators missing expectations. Although the GDP release beat the estimate, the US dollar failed to gain ground as the euro held its own on Wednesday.

The euro was last above the 1.20 line in May, and this symbolic level could remain elusive for quite some time. The reason? Mario Draghi and his ECB colleagues continue to send out the message that the ECB has no plans to raise rates until after the summer of 2019. The markets are not expecting a rate hike before October 2019, which means that the euro won’t be able to attract investors based on higher interest rates. This means that the euro is not particularly attractive unless there is an unexpected improvement in the German and eurozone economies.

Cause and effects

EUR/USD Fundamentals

Thursday (August 30)

• 2:00 German Import Prices. Estimate 0.0%. Actual -0.2%
• All Day – German Preliminary CPI. Estimate 0.1%
• 3:00 Spanish Flash CPI. Estimate 2.2%. Actual 2.2% 
• 3:55 German Unemployment Change. Estimate -8K. Actual -8
• Tentative – Italian 10-year Bond Auction. Actual 3.25/1.4
• 8:30 US Core PCE Price Index. Estimate 0.2%
• 8:30 US Personal Spending. Estimate 0.4%
• 8:30 US Personal Income. Estimate 0.3%
• 8:30 US Unemployment Claims. Estimate 214K
• 10:30 US Natural Gas Storage. Estimate 58B
• 13:30 German Buba President Weidmann Speaks

Friday (August 31)

• 2:00 German Retail Sales. Estimate -0.2%
• 2:45 French Preliminary CPI.  Estimate 0.5%
• 5:00 Eurozone CPI Flash Estimate. Estimate 2.1%
• 5:00 Eurozone Core CPI Flash Estimate. Estimate 1.1%
• 5:00 Eurozone Unemployment Rate. Estimate 8.2%
• 10:00 US Revised UoM Consumer Sentiment. Estimate 95.5

*All release times are DST

*Key events are in bold

EUR/USD for Thursday, August 30, 2018

EUR/USD for August 30 at 6:10 DST

Open: 1.1708 High: 1.1718 Low: 1.1686 Close: 1.1695

EUR/USD Technical

EUR/USD ticked lower in the Asian session. The pair is showing limited movement 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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