EUR/USD – Euro Firm Despite Weak Eurozone Data

EUR/USD is showing little movement, as the pair trades in the low-1.37 range in Wednesday’s European session. On the release front, Eurozone numbers were disappointing. Inflation numbers out of France and Germany weakened in April, and Eurozone Industrial Production posted its third decline in four tries. Later in the day, the head of the German central bank, Jens Weidmann, will speak in Berlin. In the US, today’s highlight is the Producer Price Index.

The first Eurozone releases of the week were anything but impressive. German ZEW Economic Sentiment, a key indicator, weakened badly in April, dropping to 33.1 points. This was well off the estimate of 41.3 and its worst showing since December 2012. The Eurozone release followed suit, dropping to 55.2 points, compared to an estimate of 63.5 points. These indicators are based on a survey of institutional investors and analysts, and the weak numbers point to increasing concern about the Eurozone and German economies.

The euro dropped sharply last week, after comments from ECB head Mario Draghi that the ECB was ready to take monetary action at its June meeting, depending on growth and inflation forecasts. These sentiments were reinforced this week by the influential German central bank, which said it would back monetary easing measures, such as negative deposit rates, in order to combat weak inflation levels. After months of all talk from the ECB, will we see some real action next month? As the next ECB meeting nears, Eurozone releases will be under the market microscope. The markets will also be paying close attention to remarks later in the day from the head of the German central bank, Jens Weidmann.

Low inflation levels are not limited to the Eurozone. Weak inflation has been a persistent problem in the US, and Fed chair Yellen highlighted this issue when speaking before Congress last week. PPI, a key inflation indicator, will be released on Wednesday. The index improved to 0.5% last month, but the markets are bracing for a weak reading of just 0.2% for April. If this modest estimate is not met, the dollar could lose some ground.

 

EUR/USD for Wednesday, May 14, 2014

Forex Rate Graph 21/1/13

EUR/USD May 14 at 9:25 GMT

EUR/USD 1.3722 H: 1.3731 L: 1.3697

 

EUR/USD Technical

S3 S2 S1 R1 R2 R3
1.3487 1.3585 1.3649 1.3786 1.3893 1.400

 

  • EUR/USD has posted modest gains in Wednesday trade.
  • 1.3649 is providing support to the pair. 1.3585 is stronger.
  • On the upside, 1.3786 is the next line of resistance. This is followed by 1.3893.
  • Current range: 1.3649 to 1.3786

Further levels in both directions:

  • Below: 1.3649, 1.3585, 1.3487 and 1.3346
  • Above: 1.3786, 1.3893, 1.4000, 1.4149

 

OANDA’s Open Positions Ratio

EUR/USD ratio is pointing to gains in long positions on Wednesday, reversing the directions seen a day earlier. This is consistent with the pair’s current movement, as the euro has posted slight gains. The ratio is almost evenly split, indicative of a lack of trader bias towards the movement of EUR/USD.

EUR/USD has posted slight gains in the European session. We could see some stronger movement in the North American session, with the release of PPI.

 

EUR/USD Fundamentals

  • 6:00 German Final CPI. Estimate -0.2%. Actual -0.2%.
  • 6:45 French CPI. Estimate 0.2%. Actual 0.0%.
  • 9:00 Eurozone Industrial Production. Estimate -0.3%. Actual -0.3%.
  • 12:30 US PPI. Estimate 0.2%.
  • 12:30 US Core CPI. Estimate 0.2%.
  • 14:30 Deutsche Bundesbank President Jens Weidmann Speaks.
  • 14:30 US Crude Oil Inventories. Exp. -0.4M.

*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.

Kenny Fisher

Kenny Fisher

Currency Analyst at Market Pulse
Kenny Fisher joined OANDA in 2012 as a Currency Analyst. Kenny writes a daily column about current economic and political developments affecting the major currency pairs, with a focus on fundamental analysis. Kenny began his career in forex at Bendix Foreign Exchange in Toronto, where he worked as a Corporate Account Manager for over seven years.