EUR/USD – Euro Under Pressure Ahead of Growth, Inflation Numbers

EUR/USD continues to post downwards, as the pair has posted slight losses on Wednesday. In the European session, the pair is trading in the mid-1.33 range. On the release front, German and French inflation numbers remained low. As well, Eurozone Industrial Production posted a second straight decline. In the US, today’s major events are Core Retail Sales and Retail Sales. The markets are keeping a close eye on Eurozone GDP and inflation data, which will be released on Thursday.

Despite broad interest rate cuts by the ECB in June, Eurozone growth and inflation levels have not improved. On Wednesday, German inflation numbers remained weak, while French CPI posted its first decline since January. There was no relief from Eurozone Industrial Production, which came in at -0.3%, its third decline in four readings. This disappointed the markets, which had expected an estimate of 0.5%. The euro remains under strong pressure, and if Eurozone GDP and CPI readings miss expectations, we could see the currency slide further.

With the Eurozone economy sputtering, it shouldn’t come as a surprise that confidence indicators are pointing sharply downwards. German ZEW Economic Sentiment, a key release, took a tumble in July, falling to just 8.6 points, down from 27.1 points a month earlier, and its lowest level since November 2012. The estimate stood at 18.2 points. This is the latest figure in a string of weak German releases. Last week, the trade surplus narrowed and manufacturing numbers missed expectations. With economic indicators pointing downward and confidence in the German economy ebbing, we could see a decline in German GDP in the second quarter, which would likely have a chilling effect on the shaky euro. Eurozone ZEW Economic Sentiment followed suit, slipping to 23.7 points, compared to 48.1 points in the previous release. The markets had expected a reading of 41.3 points.

In the US, employment indicators are under the market microscope, as the strength of the labor market is one of the most important factors influencing the Federal Reserve regarding the timing of an interest rate hike. A rate hike is expected by mid-2015, but stronger economic data, especially on the employment front, could hasten a rate move. There was positive news on Tuesday, as JOLTS Job Openings continued to improve and climbed to a 13-year high. We’ll get a look at Unemployment Claims on Thursday.

EUR/USD for Wednesday, August 13, 2014

EUR/USD August 13 at 9:30 GMT

EUR/USD 1.3354 H: 1.3374 L: 1.3342

EUR/USD Technical

• EUR/USD was almost unchanged in the Asian session. The pair has edged lower in the European session as the euro remains under pressure.
• 1.3346 has reverted to a support role and is a weak line. 1.3295 is stronger.
• 1.3487 is a strong resistance line.
• Current range: 1.3346 to 1.3487

Further levels in both directions:

• Below: 1.3346, 1.3295, 1.3175 and 1.3104
• Above: 1.3487, 1.3585, 1.3651 and 1.3793

OANDA’s Open Positions Ratio

EUR/USD ratio is pointing to gains in short positions in Wednesday trade, reversing the direction seen a day earlier. This is consistent with the pair’s movement, as the euro has posted small losses. The ratio has a majority of long positions, indicative of trader bias towards the euro moving to higher ground.

EUR/USD Fundamentals

• 6:00 German Final CPI. Estimate 0.3%. Actual 0.3%.
• 6:00 German Final WPI. Estimate 0.3%. Actual 0.1%.
• 6:45 French CPI. Estimate -0.2%. Actual -0.3%.
• 9:00 Eurozone Industrial Production. Estimate +0.5%. Actual -0.3%.
• Tentative – German 10-year Bond Auction.
• 12:30 US Core Retail Sales. Estimate 0.4%.
• 12:30 US Retail Sales. Estimate 0.2%.
• 13:05 FOMC Member William Dudley Speaks.
• 14:00 US Business Inventories. Estimate 0.4%.
• 14:30 US Crude Oil Inventories. Estimate -0.8M.
• 17:01 US 10-year Bond Auction.

*Key releases are highlighted in bold

*All release times are GMT

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