EUR/USD – Euro Dips Below 1.20 as Risk Appetite Returns

The euro is almost unchanged in the Tuesday session, after recording considerable losses on Monday. Currently, the pair is trading at 1.1962, up 0.06% on the day. On the release front, it’s a data-light day, with no eurozone events. In the US, today’s key event is JOLT Jobs Openings, which is expected to slow to 5.96 million. On Wednesday, the US releases PPI, with an estimate of 0.3%.

The US dollar suffered broad losses last week, as tensions rose in the Korean peninsula after North Korea tested a hydrogen bomb. This weighed on risk appetite, and the euro jumped on the bandwagon, gaining 1.3 percent against the greenback. With North Korea celebrating its 69th anniversary of independence, there were concerns that Pyongyang would use the occasion to flex some muscle and test a nuclear bomb or missile. North Korea marked last year’s anniversary by exploding its fifth nuclear test. There were no incidents over the weekend, although the US, along with its allies Japan and South Korea, remain on alert for further provocations from the north. The dollar responded with gains on Monday, as EUR/USD dipped below the symbolic 1.20 level.

The US economy has been performing well in the second quarter. Preliminary GDP came in at a sizzling 3.0%, and the labor market remains close to capacity. Still, the Achilles heel of the economy remains stubbornly low inflation levels. Wage pressure has been limited, despite the fact that many businesses cannot fill job openings. Weak inflation has hampered the Fed’s plans to raise interest rates a third time this year, and the odds of a December hike have dipped to just 31%, as the markets are increasingly doubtful that the Fed will make a move before next year. Will the inflation picture improve? We could see better numbers this week for August inflation – PPI is expected to improve to 0.3% on Tuesday, and the same gain is forecast for CPI on Wednesday. Both estimates are higher than the July readings.

Unwinding Safe Haven Buying

EUR/USD Fundamentals

Tuesday (September 12)

• 1:30 French Final Private Payrolls. Estimate 0.5%. Actual 0.4%
• 4:00 Italian Quarterly Unemployment Rate. Estimate 11.3%. Actual 11.2%
• 6:00 US NFIB Small Business Index. Estimate 104.8. Actual 105.3
• 10:00 US JOLTS Job Openings. Estimate 5.96M
• 13:01 US 10-y Bond Auction

Upcoming Key Events

Wednesday (September 13)

• 8:30 US PPI. Estimate 0.3%

*All release times are GMT

*Key events are in bold

EUR/USD for Tuesday, September 12, 2017

EUR/USD Tuesday, September 12 at 6:30 EDT

Open: 1.1953 High: 1.1978 Low: 1.1945 Close: 1.1962

EUR/USD Technical

EUR/USD was flat in the Asian session. The pair posted small gains but then retracted in the European session

• 1.1876 is providing support
• 1.1996 is the next resistance line

Further levels in both directions:

• Below: 1.1876, 1.1712 and 1.1611
• Above: 1.1996, 1.2018, 1.2108 and 1.2221
• Current range: 1.1876 to 1.1996

OANDA’s Open Positions Ratio

EUR/USD ratio is showing gains in short positions. Currently, short positions have a majority (60%), indicative of EUR/USD reversing directions and moving lower.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.