EUR/USD – German Political Woes Weighing on Euro

After starting the week with losses, the euro has settled down in the Tuesday session. Currently, EUR/USD is trading at 1.1734, down 0.00% on the day. In economic news, there are no eurozone indicators on the calendar. The US will release Existing Home Sales, with an estimate of 5.42 million. As well, Fed Chair Janet Yellen will speak at an event in New York City. Wednesday is busy, as the US releases employment, durable goods and consumer confidence reports. Also, the Federal Reserve releases the minutes of its November policy meeting.

Germany is facing one of its biggest political crises in decades, as President Angela Merkel has been unable to form a coalition. Talks to form a government have been ongoing for a month, but the Free Democratic Party (FDP) pulled the plug on Sunday, saying there was no “basis of trust” to enter a government with Angela Merkel’s CDU-CSU alliance and the Greens. The parties have been holding negotiations for a month, but have failed to bridge the gaps on issues such as immigration. Merkel has said she is not interested in running a minority government, whereby the opposition could topple the government at any time. 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.

Will we see a triple sweep from US housing indicators? The markets are forecasting that Existing Home Sales will improve in October, following sharp housing data on Friday. Building Permits for single-family homes jumped to 1.30 million, above the estimate of 1.25 million. The annualized pace of 839,000 building permits in October was the fastest since September 2007. Housing Start also sparkled, accelerating to 1.29 million, compared to an estimate of 1.19 million. The catalyst for the strong numbers were hurricanes Harvey and Irma, which caused massive damage in the southern part of the US. With rebuilding efforts well underway, construction numbers should remain strong in the fourth quarter, which is good news for the  US economy.

Angela Merkel Prefers New Elections to Minority Government

EUR/USD Fundamentals

Tuesday (November 21)

• 10:00 US Existing Home Sales. Estimate 5.42M
• 18:00 US Federal Reserve Chair Janet Yellen Speaks

Wednesday (November 22)

• 8:30 US Core Durable Goods Orders. Estimate 0.4%
• 8:30 US Unemployment Claims. Estimate 241K
• 8:30 US Core Durable Goods Orders. Estimate 0.4%
• 8:30 US Durable Goods Orders. Estimate 0.4%
• 10:00 US Revised UoM Consumer Sentiment. Estimate 98.2
• 14:00 US FOMC Meeting Minutes

*All release times are GMT

*Key events are in bold

EUR/USD for Tuesday, November 21, 2017

EUR/USD for November 21 at 4:15 EDT

Open: 1.1733 High: 1.1758 Low: 1.1730 Close: 1.1734

EUR/USD Technical

EUR/USD has been flat in the Asian and European sessions

• 1.1657 is providing support
• 1.1777 has switched to a resistance role. It is a weak line

Further levels in both directions:

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

OANDA’s Open Positions Ratio

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

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