EUR/USD – Lack of Fundamentals Leaves Euro Trading Sideways

EUR/USD is showing little movement in the Wednesday session. Currently, the pair is trading at 1.1858, down 0.07% on the day. In economic news, there are no major events in the eurozone. The US will release key inflation reports, with PPI and Core PPI both expected to drop from 0.3% to 0.2%. On Thursday, the ECB releases an economic bulletin, and the US will publish consumer inflation reports.

The currency markets are not showing much movement after President Trump’s dramatic speech on Tuesday. Trump announced that the US would withdraw from the Iran nuclear deal. Trump blasted the agreement and said that the US would impose stiff sanctions on Iran. However, Britain, France and Germany have said they plan to remain in the deal, and will be holding a high-level meeting with Iranian leaders on how the agreement can be salvaged. With the US acknowledging that the White House does not have a ‘Plan B’, it’s unclear what happens next. Meanwhile, tensions between Israel and Iran are at a fever pitch, and any confrontation between the two could shake up the markets.

Germany has posted some soft numbers recently, which could have major ramifications for ECB fiscal policy. The ECB cut its stimulus package at the start of the year from EUR 60 billion to 30 billion, while at the same time it extended the program to September. However, soft eurozone numbers, especially in Germany, have raised concerns that the bank may decide to again extend stimulus into 2019. German Factory Orders posted a second decline in the past three months, and the most recent PMIs in the services and manufacturing sectors also headed lower. On Tuesday, German indicators bounced back after a weak start to the week. Industrial Production climbed 1.0%, beating the estimate of 0.8% and ending a nasty streak of three straight declines. As well, Germany posted a trade surplus of EUR 22.0 billion, easily beating the estimate of EUR 19.9 billion. This marked a 4-month high.

The Federal Reserve’s newest regional Fed president, Thomas Barkin, delivered a major speech on Monday, and his tone was decidedly upbeat. Barkin said that the economy is “remarkably strong: above-trend growth, low unemployment, inflation at target”. Barkin added that although the labor market is strong, it is not causing pressure on wages, but low unemployment should lead to an increase in inflationary pressures. As for upcoming rate increases, Barkin was careful to remain mum on how many rate hikes he expects this year. The Fed raised rates in March by a quarter-point and continues to forecast two additional increases this year. However, some policymakers are calling for three more hikes, given the strong health of the US economy.

U.S Dollar Rises on Higher Yields, EM pairs suffer

More Volatility on the Way!!

EUR/USD Fundamentals

Wednesday (May 9)

• 2:45 French Industrial Production. Estimate 0.4%. Actual -0.4%
• 4:00 Italian Retail Sales. Estimate 0.1%. Actual -0.2%
• Tentative – German 30-year Bond Auction
• 8:30 US PPI. Estimate 0.2%
• 8:30 US Core PPI. Estimate 0.2%
• 10:00 US Final Wholesale Inventories. Estimate 0.6%
• 10:30 US Crude Oil Inventories. Estimate -0.2M
• 13:01 US 10-year Bond Auction

Thursday (May 10)

• 4:00 ECB Economic Bulletin
• 8:30 US CPI. Estimate 0.3%
• 8:30 US Core CPI. Estimate 0.2%
• 8:30 US Unemployment Claims. Estimate 219K

*All release times are DST

*Key events are in bold

EUR/USD for Wednesday, May 9, 2018

EUR/USD for May 9 at 6:15 DST

Open: 1.1865 High: 1.1870 Low: 1.1822 Close: 1.1858

EUR/USD Technical

EUR/USD showed little movement in the Asian session. In European trade, the pair edged lower but has recovered

• 1.1809 is providing support
• 1.1915 is the next resistance line

Further levels in both directions:

• Below: 1.1809, 1.1718 and 1.1613
• Above: 1.1915, 1.2025, 1.2092 and 1.2235
• Current range: 1.1809 to 1.1905

OANDA’s Open Positions Ratio

EUR/USD ratio is unchanged in the Wednesday session. Currently, long positions have a small majority (51%), indicative of a lack of trader bias towards EUR/USD.

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.