EUR/USD – Euro Stable As German Retail Sales Slips

EUR/USD has edged upwards on Friday, as the pair continues to trade slightly above the 1.36 line in the European session. In economic news, German Retail Sales was a disappointment, slipping to a four-month low. Italian Preliminary CPI posted a decline in April. Over in the US, there are no major events on the schedule. Today’s highlights are Chicago PMI and  Revised UoM Consumer Sentiment. EUR/USD did not have much reaction to major releases out of the US on Thursday. Unemployment Claims were sharp, but Preliminary GDP contracted and Pending Home Sales fell short of the estimate.

German Retail Sales, the primary gauge of consumer spending, had a rough April, posting a decline of -0.9%, the worst showing we’ve seen in 2014. The markets had  expected a gain of 0.4%. This follows a disastrous German Unemployment Change, which moved higher for the first time in six months. In France, another major economy, Consumer Spending declined in April, dropping 0.3%. Clearly, Eurozone consumers are concerned about the economy, and spendthrift consumers is something the Eurozone can ill afford. These kinds of soft numbers add urgency to the ECB finally taking off the gloves and making some kind of move at its June policy meeting.

Key numbers out of the US were mostly a disappointment on Thursday. Preliminary GDP, the primary gauge of economic activity, posted its first decline since Q2 of 2009. The indicator came in at -1.0% for Q1, worse than the estimate of -0.6%. Harsh winter conditions took their toll on the US economy in Q1, and analysts expect a rebound in Q2. After a strong gain in March, Pending Home Sales softened, coming in at 0.4%. This was nowhere near the gain of 1.1%. On a brighter note, Employment Claims dropped to 300 thousand, easily beating the estimate of 321 thousand.

As if the EU didn’t have enough trouble with the region’s listless economies, there was bad news on the political scene as well. On the weekend, anti-EU parties shocked the establishment by posting huge gains in European parliamentary elections. These “euroskeptic” parties did exceptionally well in France, the UK and Greece. With Eurozone countries suffering from weak growth and high unemployment, voters had a chance to lash back in the elections, and their frustration and anger was heard loud and clear at the ballot box. French Prime Minister Manuel Valls called the results an “earthquake” and the elections could weigh on the euro, although so far the currency has remained firm. At the same time, the EU cannot afford a ‘business as usual’ approach after such elections results, so we could soon see changes in economic policies which could affect the euro.

 

EUR/USD for Friday, May 30, 2014

EUR/USD May 30 at 9:05 GMT

EUR/USD 1.3612 H: 1.3617 L: 1.3598

 

EUR/USD Technical

S3 S2 S1 R1 R2 R3
1.3346 1.3487 1.3585 1.3649 1.3786 1.3893

 

  • EUR/USD has edged higher on Friday. The pair dipped below the 1.36 late in the Asian session but has bounced back.
  • 1.3585 continues to provide support, but is a weak line. There is stronger support at 1.3487.
  • 1.3649 is the next resistance line. 1.3786 is stronger.

Further levels in both directions:

  • Below: 1.3585, 1.3487, 1.3346 and 1.3219
  • Above: 1.3649, 1.3786, 1.3893, 1.4000 and 1.4149

 

OANDA’s Open Positions Ratio

EUR/USD ratio is unchanged in Friday trading. This is not consistent with the movement we are seeing from the pair, as the euro has edged higher. The ratio has a majority of long positions, indicative of a trader bias towards the euro continuing to post gains.

EUR/USD is trading slightly above the 1.36 line. The pair is unchanged in the European session.

 

EUR/USD Fundamentals

  • 6:00 German Retail Sales. Estimate 0.4%. Actual -0.9%.
  • 9:00 Italian Preliminary CPI. Estimate 0.0%.
  • 12:30 US Core PCE Price Index. Estimate 0.2%.
  • 12:30 US Personal Spending. Estimate 0.2%.
  • 12:30 US Personal Income. Estimate 0.3%.
  • 13:45 US Chicago PMI. Estimate 60.8 points.
  • 13:55 Revised UoM Consumer Sentiment. Estimate 82.9 points.
  • 21:00 US FOMC Member Charles Plosser Speaks.

*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.