EUR/USD – Slight Gains As Eurozone CPI Meets Expectations

EUR/USD is showing some fluctuation in Wednesday’s European session, as the pair reacts to the release of Eurozone and German data. The pair is currently trading in the low-1.38 range. In economic news, German retail sales slipped but unemployment numbers were strong. Eurozone CPI Flash Estimate posted a gain and met expectations. In the US, there’s plenty of action today. We’ll get a look at ADP Non-Farm Payrolls as well as Advance GDP. As well, the Federal Reserve will release a policy statement, and the Fed is widely expected to trim QE by $10 billion.

German numbers were a mix on Wednesday. Retail Sales, the primary gauge of consumer spending, weakened in March, coming in at -0.7%, marking a three-month low. This was slightly lower than the estimate of -0.6%. On the bright side, Unemployment Change dropped by 25 thousand, much better than the estimate of -12 thousand. Meanwhile, Eurozone CPI Flash Estimate posted a gain of 0.7%, just short of the estimate of 0.8%. The euro has shown some movement in the European session, and has rebounded after dipping below the 1.38 line earlier.

The markets are keeping a close eye on the Federal Reserve, which will issue a policy statement later in the day. The Fed is expected to trim QE by another $10 billion, which would reduce the asset purchase scheme to $45 billion. If US numbers remain steady, the Fed plans to wind up QE before the end of 2014, at which time the guessing game of when interest rates might rise will begin in earnest. Meanwhile, further tapers to QE represent a vote of confidence in the US economy, so the greenback could post gains against the major currencies following another trim.

The ECB has been under increasing pressure to take action as inflation remains in the doldrums in the Eurozone and the euro continues to trade at high levels. On Thursday, Draghi took note of the high euro exchange rate, calling it an “increasingly important factor” in monetary policy. He hinted that the central bank’s monetary policy stance could change if the euro continues to gain in value. When the euro appeared headed to the 1.40 level several weeks ago, Draghi was able to “talk down” the currency. Will this play work a second time? Draghi also stated that an asset purchase program could be introduced if the inflation outlook worsens.

EUR/USD for Wednesday, April 30, 2014

EUR/USD April 30 at 9:30 GMT

EUR/USD 1.3823 H: 1.3833 L: 1.3784

EUR/USD Technical

• EUR/USD has posted gains in Wednesday trade.
• 1.3786 has weakened in support following losses by the euro on Tuesday. 1.3649 is a stronger support line.
• 1.3893 is the next resistance line. This is followed by the key level of 1.40, which has not been breached since October 2011.
• Current range: 1.3786 to 1.3893

Further levels in both directions:

• Below: 1.3786, 1.3649, 1.3585, 1.3410 and 1.3335
• Above: 1.3893, 1.4000, 1.4149 and 1.4307

OANDA’s Open Positions Ratio

EUR/USD ratio is pointing to gains in long positions in Wednesday trading. This is consistent with the movement we are seeing from the pair, as the euro has moved to higher ground. The ratio is made up of short positions, indicative of the dollar reversing directions and moving to higher levels.

EUR/USD is trading in the low-1.38 range. The pair has gained ground in the European session.

EUR/USD Fundamentals

• 6:00 German Retail Sales. Estimate -0.6%. Actual -0.7%.
• 6:45 French Consumer Spending. Estimate 0.4%. Actual 0.3%.
• 7:00 Spanish Flash GDP. Estimate 0.4%. Actual 0.4%.
• 7:55 German Unemployment Change. Estimate -10K. Actual -25K.
• 8:00 Italian Monthly Unemployment Rate. Estimate 13.0%. Actual 12.7%.
• 8:57 French 10-year Bond Auction. Estimate 2.00%.
• 9:00 Eurozone CPI Flash Estimate. Estimate 0.8%. Actual 0.7%.
• 9:00 Italian Preliminary CPI. Estimate 0.1%. Actual 0.2%.
• 12:15 US ADP Nonfarm Employment Change. Estimate 203K.
• 12:30 US Advance GDP. Estimate 1.2%.
• 12:30 US Advance GDP Price Index. Estimate 1.6%.
• 12:30 US Employment Cost Index. Estimate 0.5%.
• 13:45 US Chicago PMI. Estimate 56.6 points.
• 14:30 US Crude Oil Inventories. Estimate 1.3M.
• 18:00 US FOMC Statement.
• 18:00 US Federal Funds Rate. Estimate <0.25%.

*Key releases are highlighted in bold

*All release times are GMT

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.