EUR/USD – Euro Punches Past 1.17 on Strong German GDP

The euro has posted gains in the Tuesday session and is trading at a 3-week high. Currently, EUR/USD is trading at 1.1716, up 0.42% on the day. In economic news, German Preliminary GDP accelerated to 0.8% in the third quarter, above the estimate of 0.6%. German Final CPI came in at a flat 0.0%, matching the forecast. Eurozone Flash GDP remained unchanged at 0.6%, matching the forecast. ZEW Economic Sentiment reports were mixed. The German release of 18.7 missed the forecast of 19.8, while the Eurozone reading jumped to 30.9, above the estimate of 29.3 points. Central bankers will attend an ECB event in Frankfurt, and the markets will be listening closely to Mario Draghi and Janet Yellen. As well, the US releases Core CPI and CPI reports. On Wednesday the US releases key consumer inflation and  spending reports.

German GDP jumped to 0.8% in the third quarter, recording its strongest quarter since 2014. Germany’s economy is growing at annualized rate of 2.8% in 2017. The catalyst for the strong reading was an increase in business investment, as sales of machinery and equipment increased. German fundamentals remain strong, as business and consumer confidence is high and unemployment remains at record-low levels. However, the positive economic conditions have failed to trigger much inflation, which has been a problem throughout the eurozone. German Final CPI dipped to 0.0% in October, the first time inflation has not moved higher since May. Germany has been the locomotive for the euorozone, and boosted traditional laggards such as France and Spain. Geopolitical concerns such as Catalonia and Brexit have the potential to crash the party, but in the meantime, eurozone indicators have generally been pointing upwards.

With central banks signalling major policy shifts, communicating clearly with markets has become even more critical. The ECB is hosting a meeting on the challenges of central bank communication, and Janet Yellen and Mario Draghi will both be participating in the discussions. The ECB is set to taper its asset-purchase program in January, while the Fed has started trimming its massive balance sheet. Both Yellen and Draghi are all-too-familiar with unwanted market movement when investors have misinterpreted the Fed or the ECB, and will not want to repeat past mistakes.

EUR/USD Fundamentals

Tuesday (November 14)

• 2:00 German GDP. Estimate 0.6%. Actual 0.8%
• 2:00 German Final CPI. Estimate 0.0%. Actual 0.0%
• 3:05 FOMC Member Charles Evans Speaks
• 4:00 Italian Preliminary GDP. Estimate 0.5%
• 5:00 ECB President Mario Draghi Speaks
• 5:00 Eurozone Flash GDP. Estimate 0.6%. Actual 0.6%
• 5:00 German ZEW Economic Sentiment. Estimate 19.8. Actual 18.7
• 5:00 Eurozone Industrial Production. Estimate -0.6%. Actual -0.6%
• 5:00 Eurozone ZEW Economic Sentiment. Estimate 29.3. Actual 30.9
• 5:00 US Federal Chair Janet Yellen Speaks
• 6:00 US NFIB Small Business Index. Estimate 104.2
• 8:30 US PPI. Estimate 0.1%
• 8:30 US Core PPI. Estimate 0.2%

Wednesday (November 15)

• 8:30 US CPI. Estimate 0.1%
• 8:30 US Core CPI. Estimate 0.2%
• 8:30 US Retail Sales. Estimate 0.2%
• 8:30 US Core Retail Sales. Estimate 0.0%
• 8:30 US Empire State Manufacturing Index. Estimate 25.3

*All release times are GMT

*Key events are in bold

EUR/USD for Tuesday, November 14, 2017

EUR/USD for November 14 at 5:20 EDT

Open: 1.1667 High: 1.1720 Low: 1.1662 Close: 1.1715

EUR/USD Technical

EUR/USD inched higher in the Asian session and has posted gains in European trade

• 1.1657 is providing support
• 1.1777 is the next resistance line

Further levels in both directions:

• Below: 1.1657, 1.1574, 1.1489 and 1.1366
• Above: 1.1777, 1.1876 and 1.1936
• Current range: 1.1657 to 1.1777

OANDA’s Open Positions Ratio

EUR/USD is almost unchanged in the Tuesday session. Currently, short positions have a majority (63%), indicative of EUR/USD reversing directions and moving downwards.

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.