EUR/USD – Euro Unchanged, German CPI Next

EUR/USD continues to have an uneventful week, as the pair trades slightly above the 1.12 line. There are no major Eurozone releases scheduled until Thursday. In Germany, GfK Consumer Climate came in at 10.0 points, within expectations. Later in the day, ECB president Mario Draghi will address the German parliament in Berlin. In the US, the spotlight is on durable goods reports. The markets are bracing for a decline from Core Durable Goods Orders, with an estimate of -0.5%. As well, Federal Reserve chair Janet Yellen will testify before the House Committee on Financial Services. On Thursday, Germany releases Preliminary CPI and the US will release Final GDP and unemployment claims.

US consumer confidence numbers continue to impress the markets. The CB Consumer Confidence jumped to 104.1 points in September, much higher than the forecast of 98.6 points. This excellent release improved upon a strong August report of 101.1 points. Stronger consumer confidence often translates into increased spending by consumers, which is vital for economic growth. If consumer spending numbers also move higher, the likelihood of a December hike will likely increase.

Federal Reserve chair Janet Yellen will testify before a Congressional committee on Thursday, and her remarks could shed more light on the Fed’s plans regarding a rate hike. Last week, the Fed held interest rates at 0.25%. The Fed policy statement was generally upbeat and broadly hinted at a December rate hike. However, the markets can be forgiven for remaining somewhat skeptical, as the Fed has previously talked about a strong US economy and failed to follow up with a rate hike. Currently, a rate hike is priced in at 44 percent, but plenty can happen before the December policy meeting (the Fed is unlikely to make a move in November, just ahead of the US presidential election). The Fed has consistently stated that the next rate hike will be data-dependent, which means that stronger economic numbers, especially on the inflation front, will increase the likelihood of a December hike.

EUR/USD Fundamentals

Wednesday (September 28)

• 6:00 GfK German Consumer Climate. Estimate 10.2. Actual 10.0
• 12:30 US Core Durable Goods Orders. Estimate -0.5%
• 12:30 US Durable Goods Orders. Estimate -1.0%
• 14:00 US Fed Chair Janet Yellen Testifies
• 14:10 US FOMC Member James Bullard Speaks
• 14:30 ECB President Mario Draghi Speaks
• 14:30 US Crude Oil Inventories. Estimate 2.4M
• 23:15 US FOMC Member Esther George Speaks

Thursday (September 29)

• All Day – German Preliminary CPI. Estimate 0.0%
• 12:30 US Final GDP. Estimate 1.3%
• 12:30 US Unemployment Claims. Estimate 260K
• 16:00 US Federal Chair Janet Yellen Speaks

*All release times are EDT

* Key events are in bold

EUR/USD for Wednesday, September 28, 2016

EUR/USD September 28 at 10:20 GMT

Open: 1.1216 High: 1.1224 Low: 1.1182 Close: 1.1213

EUR/USD Technical

• EUR/USD was flat in the Asian session. In European trade, the pair posted small losses but has recovered
• There is resistance at 1.1278
• 1.1150 is providing strong support

Further levels in both directions:

• Below: 1.1150, 1.1054, 1.0957 and 1.0821
• Above: 1.1278, 1.1376 and 1.1467
• Current range: 1.1150 to 1.1278

OANDA’s Open Positions Ratio

EUR/USD ratio is unchanged in the Wednesday session. Currently, short positions have a majority (57%), indicative of trader bias towards EUR/USD breaking out and moving lower.

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.