EUR/USD – Euro Ticks Higher, Markets Eye US GDP

The euro has posted small gains on Friday, continuing the upward movement we’ve seen in the past two sessions. EUR/USD is currently trading slightly above the 1.11 line. On the release front, it’s an unusually busy Friday in both the Eurozone and the US. Of note in the Eurozone, CPI Flash Estimate posted a small gain of 0.2%, within expectations. Preliminary GDP rose 0.3%, matching the forecast. In the US, there are two events on the schedule. Advance GDP, the first GDP report for the second quarter, is expected to show a sharp gain of 2.6%. We’ll also get a look at UoM Consumer Sentiment, which is expected to drop to 90.3 points.

Eurozone inflation levels remain low, but there was slight improvement in the July CPI report. The index posted a small gain of 0.2%, beating the forecast of 0.1%. Although not a strong reading, this marked a second straight gain after a nasty streak of four consecutive declines. Are inflation levels slowly on their way upwards? Core CPI remained at 0.9%, but French and Italian CPI both posted declines and missed their estimates. Elsewhere, Eurozone Preliminary GDP gained 0.3% in the second quarter, matching the forecast. This marks a downturn in the economy, as Revised GDP, the final GDP report for the first quarter, climbed 0.6%. The unemployment picture remained unchanged, as the Unemployment Rate remained steady at 10.1%, matching the forecast.

There were no surprises from Janet Yellen & Co., which concluded its policy meeting on Wednesday. The bank continued to hold the course on interest rates, maintaining levels at 0.25% in a decisive 9-1 vote. The Fed statement sounded upbeat, saying that risks to the economy have receded and the employment market is getting tighter. The Fed added that it continues to monitor inflation levels and noted that the housing sector had improved. Will the Fed make a move and raise rates in September? It appears that the Fed could go either way, and policymakers will make a decision at the September meeting based on US economic releases. This means that key US numbers, such as Friday’s Advance GDP report, will be under the market microscope, and unexpected readings could lead to strong volatility in the currency markets.

EUR/USD Fundamentals

Friday (July 29)

• 5:30 French Preliminary GDP. Estimate 0.2%. Actual 0.0%
• 6:00 German Retail Sales. Estimate 0.0%. Actual -0.1%
• 6:45 French Consumer Spending. Estimate 0.1%. Actual -0.8%
• 6:45 French Preliminary CPI. Estimate -0.3%. Actual -0.4%
• 7:00 Spanish Flash CPI. Estimate -0.5%. Actual -0.6%
• 7:00 Spanish Flash GDP. Estimate 0.7%. Actual 0.7%
• 8:00 Italian Monthly Unemployment Rate. Estimate 11.4%. Actual 11.6%
• 9:00 Eurozone CPI Flash Estimate. Estimate 0.1%. Actual 0.2%
• 9:00 Eurozone Core CPI Flash Estimate. Estimate 0.9%. Actual 0.9%
• 9:00 Preliminary Flash GDP. Estimate 0.3%. Actual 0.3%
• 9:00 Italian Preliminary CPI. Estimate 0.0%. Actual 0.2%
• 9:00 Eurozone Unemployment Rate. Estimate 10.1%. Actual 10.1%
• 12:30 US Advance GDP. Estimate 2.6%
• 12:30 US Advance GDP Price Index. Estimate 1.9%
• 12:30 US Employment Cost Index. Estimate 0.6%
• 13:45 US Chicago PMI. Estimate 54.3
• 14:00 US Revised UoM Consumer Sentiment. Estimate 90.2
• 14:00 US Revised UoM Inflation Expectations
• 20:00 Eurozone EBA Bank Stress Test Results

* Key releases are in bold

*All release times are GMT

EUR/USD for Friday, July 29, 2016

EUR/USD July 29 at 10:30 GMT

Open: 1.1082 High: 1.1111 Low: 1.1067 Close: 1.1110

EUR/USD Technical

• EUR/USD was flat in the Asian session and has posted small gains in the European session
•  1.1054 is providing support
•  There is resistance at 1.1150

Further levels in both directions:

• Below: 1.1054, 1.0925, 1.0821 and 1.0708
• Above: 1.1150, 1.1278 and 1.1376
• Current range: 1.1054 to 1.1150

OANDA’s Open Positions Ratio

EUR/USD ratio is almost unchanged on Friday, consistent with the lack of movement from EUR/USD. Currently, short positions have a strong majority (58%), indicative of trader bias towards 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.