EUR/USD – Euro Dips Despite Strong German Consumer Confidence, US Jobless Claims Ahead

EUR/USD has posted losses in the Thursday session. Currently, the pair is trading just above the 1.07 level. On the release front, German GfK Consumer Climate improved to 10.2 points, above the forecast of 10.0 points. In the US, there are two key events on the schedule – Unemployment Claims and New Home Sales. Both indicators are expected to soften compared to their previous readings. On Friday, the US releases GDP, durable goods orders and consumer confidence reports.

There was positive news out of Germany, as consumer confidence continues to rise. The GfK Consumer Climate report rose to 10.2 points in December, climbing for a third consecutive month. Still, the Eurozone consumer is not as optimistic, as Eurozone Consumer Confidence, released earlier this week, was unchanged at -5 points. The Eurozone is showing some improvement, as manufacturing and inflation numbers continue to point upwards. If the trend continues, we could see the ECB tighten monetary policy later in the year, either by raising interest rates or tapering its QE scheme. At its policy meeting last week, the ECB maintained its ultra-easy monetary policy, keeping interest rates at 0.00%, where they have been pegged since March 2016. The ECB maintained its asset-purchase program (QE), which is scheduled to continue until December 2017, at a pace of EUR 60 billion/mth.

European leaders have generally been apprehensive about new president Donald Trump, with fears that the US could take an isolationist stance. Trump has called NATO obsolete and openly displayed his support for Britain’s decision to leave the European Union. Earlier in the week, Trump signed an executive order formally withdrawing the US from the Trans-Pacific Partnership, a broad trade agreement which the US had signed but not ratified. Trump had promised to leave the TPP during the election, arguing that the deal would hurt American workers. Is NAFTA Trump’s next target? Trump has taken a tough line on US companies that have moved production outside of the US and has threatened to impose tariffs on companies that move production to Mexico. Predictably, the markets are very worried that the global economy could downturn if Trump implements additional protectionist measures. If America’s trade partners choose to retaliate against Trump’s moves, this could lead to a trade war in which there are no winners. 

EUR/USD Fundamentals

Thursday (January 26)

• 2:00 GfK German Consumer Climate. Estimate 10.0. Actual 10.2
• 3:00 Spanish Unemployment Rate. Estimate 18,9%. Actual 18.6%
• 3:30 German Buba President Weidmann Speech
• 4:00 Italian Retail Sales. Estimate +0.1%. Actual -0.7%
• All Day – Eurogroup Meetings
• 8:30 US Unemployment Claims. Estimate 247K
• 8:30 US Goods Trade Balance, Estimate -64.5B
• 8:30 US Preliminary Wholesale Inventories. Estimate 0.9%
• 9:45 US Flash Services PMI. Estimate 54.4
• 10:00 US New Home Sales. Estimate 585K
• 10:00 US CB Leading Index. Estimate 0.5%
• 10:30 US Natural Gas Storage. Estimate -121B

*All release times are EST

*Key events are in bold

EUR/USD for Thursday, January 26, 2017

EUR/USD January 26 at 6:00 EST

Open: 1.0752 High: 1.0765 Low: 1.0712 Close: 1.0713

EUR/USD Technical

• EUR/USD was flat in the Asian session and has posted losses in European trade
• 1.0708 remains a weak support level
• 1.0873 is the next resistance line

Further levels in both directions:

• Below: 1.0708, 1.0616, 1.0506 and 1.0414
• Above: 1.0873, 1.0985 and 1.1114
• Current range: 1.0708 to 1.0873

OANDA’s Open Positions Ratio

EUR/USD ratio remains unchanged this week. Currently, short positions have a majority (55%), indicative of trader bias towards EUR/USD continuing to move higher.

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.