EUR/USD – Under Pressure As Eurozone CPI Matches Forecast

EUR/USD has edged lower to start the week, as the pair is trading in the low-1.35 range. On the release front, Eurozone Core CPI and CPI matched the forecast. In the US, today’s highlight is Empire State Manufacturing Index. The markets are expecting another strong reading. On Friday, US key numbers were weak, as PPI and UoM Consumer Sentiment both softened in May.

The ECB lowered interest rates last week in an attempt to shore up flagging inflation levels, but it’s still too early to tell if this has achieved the desired effect. On Monday, Eurozone CPI, the primary gauge of consumer inflation, dipped to 0.5%, while Core CPI improved to 0.7%. Both figures matched their estimates, so the euro has not shown much reaction to these important releases. We’ll get a look at German inflation numbers late in the week. If inflation indicators do not show substantial improvement, the ECB will be under strong pressure to take stronger monetary measures at its July policy meeting.

The US ended a rough week on a sour note, as inflation and consumer confidence numbers missed their estimates. PPI, a key gauge of inflation in the manufacturing sector, came in at -0.2%, its worst reading since October. The estimate stood at 0.1%. Preliminary UoM Consumer Sentiment also lost ground, falling to 81.3 points, short of estimate of 83.3. However, with only one reading this year below the 80-point level, US consumer confidence remains at high levels.

Thursday’s key US events were a major disappointment, as retail sales and employment numbers were weak. Retail Sales came in at 0.3%, short of the estimate of 0.5%. Core Retail Sales could only muster a gain of 0.1%, shy of the forecast of 0.4%. Unemployment Claims, one of the most important economic indicators, rose to 317 thousand, missing market expectations of 306 thousand.

EUR/USD for Monday, June 16, 2014

EUR/USD June 16 at 8:55 GMT

EUR/USD 1.3527 H: 1.3553 L: 1.3513

EUR/USD Technical

• EUR/USD has edged lower on Monday.
• 1.3487 continues to provide support. 1.3346 is stronger.
• 1.3585 is the next resistance line. There is stronger resistance at 1.3649.
• Current range: 1.3487 to 1.3585

Further levels in both directions:

• Below: 1.3487, 1.3346, 1.3219 and 1.3102
• Above: 1.3585, 1.3649, 1.3786, 1.3893 and 1.4000

OANDA’s Open Positions Ratio

EUR/USD ratio is pointing to gains in long positions on Monday, reversing the direction we saw on the previous trading day. This is not consistent with the movement of the pair, as the euro has showed little movement to start off the week. The ratio has a majority of long positions, indicative of trader bias towards the euro improving against the dollar.

EUR/USD has started off the new trading week quietly. The pair is unchanged in the European session.

EUR/USD Fundamentals

• 9:00 Eurozone CPI. Estimate 0.5%. Actual 0.5%.
• 9:00 Eurozone Core CPI. Estimate 0.7%. Actual 0.7%.
• 12:30 US Empire State Manufacturing Index. Estimate 15.2 points.
• 13:00 US TIC Long-Term Purchases. Estimate 41.3 B.
• 13:15 US Capacity Utilization Rate. Estimate 78.9%.
• 13:15 US Industrial Production. Estimate 0.6%.
• 14:00 US NAHB Housing Market Index. Estimate 47 points.

*Key releases are highlighted in bold

*All release times are GMT

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