EUR/USD – Steady After German ZEW Economic Sentiment Slips

EUR/USD is stable on Tuesday, following gains a day earlier. In the European session, the pair is trading in the high-1.35 range. On the release front, German ZEW Economic Sentiment continued to drop and fell short of the estimate. Eurozone ZEW Economic Sentiment improved in May but also fell short of the forecast. Over in the US, we’ll get a look at two key releases – Building Permits and Core CPI.

German ZEW Economic Sentiment, a well-respected indicator, continues to lose ground throughout 2014. The index weakened to 29.8 points, well off the estimate of 35.2 points. This was the worst reading we’ve seen since November 2012. Eurozone ZEW Economic Sentiment improved in May, climbing to 58.4 points. However, this fell short of the estimate of 59.6. Despite the dismal German release, the euro is holding its own against the US dollar.

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 didn’t react to these important releases. We’ll get a look at German inflation numbers late in the week. If inflation indicators in the Eurozone don’t show substantial improvement, the ECB will be under strong pressure to take stronger monetary measures at its July policy meeting.

After a poor performance last week, US releases started the week on a positive note, as Empire State Manufacturing Index climbed to 19.3 points, its best showing since February 2012. This easily surpassed the estimate of 15.2 points. The markets are keeping a close eye on Core CPI, the primary gauge of consumer inflation. The markets are expecting another weak reading, with an estimate of 0.2%.

 

EUR/USD for Tuesday, June 17, 2014

EUR/USD June 17 at 9:45 GMT

EUR/USD 1.3560 H: 1.3587 L: 1.3553

 

EUR/USD Technical

S3 S2 S1 R1 R2 R3
1.3219 1.3346 1.3487 1.3585 1.3649 1.3786

 

  • EUR/USD has edged lower on Tuesday.
  • 1.3487 continues to provide support. 1.3346 is stronger.
  • 1.3585 is a weak resistance line and remains under pressure. 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 short positions on Tuesday, reversing the direction we saw a day earlier. This is consistent with the movement of the pair, as the euro has posted slight losses. The ratio has a majority of long positions, indicative of trader bias towards the euro improving against the dollar.

EUR/USD is trading quietly on Tuesday. The pair is stable in the European session.

 

EUR/USD Fundamentals

  • 8:00 Eurozone Italian Trade Balance. Estimate 4.27B. Actual 3.51B.
  • 9:00 German ZEW Economic Sentiment. Estimate 35.2 points. Actual 29.8 points.
  • 9:00 Eurozone ZEW Economic Sentiment. Estimate 59.6 points. Actual 58.4 points.
  • 12:30 US Building Permits. Estimate 1.07M.
  • 12:30 US Core CPI. Estimate 0.2%.
  • 13:00 US CPI. Estimate 0.2%.
  • 13:15 US Housing Starts. Estimate 1.04M.

*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.