EUR/USD – Euro Ticks Higher as Services PMIs Steady

EUR/USD is showing little movement this week, as the pair hovers close to the 1.19 level. Currently, the pair is trading at 1.1904, up 0.07% on the day. In economic news, German and Eurozone Services PMI were within expectations. Eurozone Retail Sales came declined 0.2%, shy of the estimate of -0.3%. In the US, today’s major event is Factory Orders, with the markets braced for a sharp decline of 3.3%. We’ll also hear from three Federal Reserve FOMC members –  Lael Brainard, Neel Kashkari and Neel Kashkari. On Wednesday, the US releases ISM Non-Manufacturing PMI, with an estimate of 55.5 points.

There were no surprises in the eurozone services sector, as German and Eurozone PMIs both pointed to slight expansion. Eurozone Services PMI slowed to 54.7, shy of the estimate of 54.9 points. However, German Services PMI improved to 53.5, edging above the forecast of 53.4 points. Retail Sales in July disappointed with a decline of 0.3%, compared to a gain of 0.5% a month earlier. This marked the first decline since January.

The markets are keeping a close eye on the ECB, which will hold a policy meeting on Thursday. The ECB’s current asset-purchase program terminates in December, and the bank will have to decide on a new scheme. However, analysts don’t expect the details of the new program to be announced until October or possibly December. Still, every nuance from Mario Draghi’s press conference will be analyzed, and any hints about changes in the ECB’s monetary policy, such as withdrawing stimulus, is likely to have a sharp impact on the euro. The eurozone’s strong performance in 2017 has raised speculation that the ECB will commence tapering in the near future, but the rejuvenated euro has complicated matters. The euro has gained some 13% against the dollar this year, with much of the appreciation due to speculation that the ECB will end its asset purchases. The stronger euro is equivalent to a raise in interest rates and has resulted in monetary tightening, so the ECB could decide on a slow exit from its asset purchase scheme. Aside from the headache of a stronger euro, ECB policymakers must wrestle with the dilemma of  what monetary stance to take with a stronger eurozone economy that remains gripped by very low inflation. Will the ECB address these concerns at the Thursday meeting?

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EUR/USD Fundamentals

Tuesday (September 5)

• 3:15 Spanish Services PMI. Estimate 56.9. Actual 56.0
• 3:45 Italian Services PMI. Estimate 55.5. Actual 55.1
• 3:50 French Final Services PMI. Estimate 55.5. Actual 54.9
• 3:55 German Final Services PMI. Estimate 53.4. Actual 53.5
• 4:00 Eurozone Final Services PMI. Estimate 54.9. Actual 54.7
• 5:00 Eurozone Retail Sales. Estimate -0.2%. Actual -0.3%
• 8:00 US FOMC Member Lael Brainard Speaks
• 10:00 US Factory Orders. Estimate -3.3%
• 10:00 US IBD/TIPP Economic Optimism. Estimate 53.1
• 13:10 US FMOC Neel Kashkari Speaks
• 18:05 US FMOC Member Robert Kaplan Speaks

Wednesday (September 6)

• 10:00 US ISM Non-Manufacturing PMI. Estimate 55.5

*All release times are GMT

*Key events are in bold

EUR/USD for Tuesday, September 5, 2017

EUR/USD Tuesday, September 5 at 6:50 EDT

Open: 1.1896 High: 1.1911 Low: 1.1868 Close: 1.1904

EUR/USD Technical

EUR/USD ticked higher in the Asian session but has given up these gains in European trade

• 1.1876 remains fluid. This line was tested in support earlier in the Tuesday session.
• 1.1996 is the next resistance line

Further levels in both directions:

• Below: 1.1876, 1.1712, 1.1616 and 1.1509
• Above: 1.1996, 1.2108 and 1.2221
• Current range: 1.1876 to 1.1996

OANDA’s Open Positions Ratio

EUR/USD ratio is unchanged in the Tuesday session. Currently, long positions have a majority (61%), indicative of 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.