EUR/USD – Euro Slightly Higher on Sharp Manufacturing PMIs

The euro has posted slight gains in the Thursday session. Currently, EUR/USD is trading at 1.1844, up 0.18% on the day. On the release front, German Final GDP accelerated to 0.8%, matching the forecast. German and Eurozone Manufacturing PMIs beat their estimates, with readings of 62.5 and 60.0, respectively. Later in the day, the ECB releases the minutes of its October policy meeting. US banks are closed for the Thanksgiving holiday, and there are no US events on the schedule. On Friday, Germany releases Ifo Business Climate.

The political deadlock continues in Germany, as President Angela Merkel faces her toughest challenge since coming to power 12 years ago. With the Free Democratic Party pulling out of coalition talks on the weekend, Merkel appears unable to form a coalition government. Merkel has said she would rather hold another election than try to govern with a shaky minority government. President Frank-Walter Steinmeier has urged the parties to redouble their efforts in order to reach an agreement, warning that another election would cause uncertainty in German as well as Europe. The crisis in the eurozone’s largest economy could paralyze the European Union, as Merkel has become the unofficial leader of the bloc. Euro-supporters such as French President Emmanuel Macron have ambitious plans to strengthen European integration, but this will have to wait until Merkel can straighten out her domestic challenges.

With Germany in political paralysis, there are concerns whether this will affect the robust German economy. In the short-term, the economy should be able to weather the crisis, but future growth could be in jeopardy if the political deadlock continues. The euro and German stock markets have remained steady since the coalition talks fell apart last week, indicating that investors remain upbeat about the German economy. There was positive news on Thursday, as German Manufacturing PMI improved to 62.5, above the forecast of 60.4 points. This marked its highest level since 2010. Eurozone Manufacturing PMI also kept pace, climbing to 60.0, compared to an estimate of 58.3 points. The strong numbers point to strong manufacturing sectors in Germany and the eurozone, which have been boosted by an increase in global demand and stronger domestic consumption.

EUR/USD Fundamentals

Thursday (November 23)

• 2:00 German Final GDP. Estimate 0.8%. Actual 0.8%
• 3:00 French Flash Manufacturing PMI. Estimate 55.9. Actual 57.5
• 3:00 French Flash Services PMI. Estimate 57.1. Actual 60.2
• 3:30 German Flash Manufacturing PMI. Estimate 60.4. Actual 62.5
• 3:30 German Flash Services PMI. Estimate 55.2. Actual 54.9
• 4:00 Eurozone Flash Manufacturing PMI. Estimate 58.3. Actual 60.0
• 4:00 Eurozone Flash Services PMI. Estimate 55.2. Actual 54.9
• 7:30 ECB Monetary Policy Meeting Accounts
• 9:00 Belgian NBB Business Climate. Estimate 0.8

Friday (November 24)

• 4:00 German Ifo Business Climate. Estimate 116.6

*All release times are GMT

*Key events are in bold

EUR/USD for Thursday, November 23, 2017

EUR/USD for November 23 at 6:15 EDT

Open: 1.1822 High: 1.1847 Low: 1.1813 Close: 1.1843

EUR/USD Technical

EUR/USD has ticked higher in the Asian and European sessions

• 1.1777 is providing support
• 1.1876 is the next resistance line

Further levels in both directions:

• Below: 1.1777, 1.1657, 1.1574 and 1.1489
• Above: 1.1876, 1.1936 and 1.2033
• Current range: 1.1777 to 1.1876

OANDA’s Open Positions Ratio

EUR/USD is unchanged in the Thursday session. Currently, short positions have a majority (59%), indicative of EUR/USD reversing directions and moving downwards.

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