EUR/USD – Little Movement as German Consumer Climate Softens

It continues to be a quiet week for EUR/USD, which is trading in the high-1.31 range in Wednesday’s European session. On the release front, there are no major releases out of the Eurozone or the US. There was more weak data out of Germany, as GfK German Consumer Climate came in at 8.6 points, marking a three-month low.

Germany is supposed to be the Eurozone’s reliable locomotive, but the region’s largest economy is showing signs of weakness. On Wednesday, GfK Consumer Climate came in at 8.6 points, short of the estimate of 8.9. It was a disappointing result compared to the June reading of 9.0 points. Earlier in the week, German Ifo Business Climate dropped to 106.3 points, its lowest reading since June 2013. This follows the Services and Manufacturing PMIs, both of which softened in July. The markets are bracing for more bad news, with a weak release expected from German Preliminary CPI on Thursday.

US durables painted a mixed picture on Tuesday. Core Durable Goods Orders, a key indicator, came in at -0.8%, its worst showing in 2014. This was nowhere near the estimate of +0.5%. At the same time, Durable Goods Orders stunned the markets with a record gain of 22.6%. The reason? A huge increase in the purchase of passenger planes in July. Meanwhile, the CB Consumer Sentiment jumped to 92.4 points, up from 90.3 a month earlier.

Financial leaders and central bankers met at Jackson Hole for a conference late last week, and the markets were all ears as Fed chair Janet Yellen delivered the keynote address on Friday. Any hopes for some dramatic news were dashed, as Yellen did not provide any clues as to the timing of a rate hike. She reiterated that the US job market still needed to improve, so employment numbers remain a crucial factor in any rate move by the Fed. There is a divergence in monetary stance between the ECB and the Fed, as the Fed is winding up QE, while the ECB may be forced to provide stimulus to the prop up the sagging Eurozone economy.

 

EUR/USD for Wednesday, August 27, 2014

EUR/USD August 27 at 11:05 GMT

EUR/USD 1.3182 H: 1.3289 L: 1.3153

 

EUR/USD Technical

S3 S2 S1 R1 R2 R3
1.2984 1.3104 1.3175 1.3295 1.3346 1.3487

 

  • EUR/USD edged upwards late in the Asian session. The pair is unchanged in the European session.
  • On the downside, 1.3175 is under strong pressure. Will the pair break through this barrier? 1.3104 is providing stronger support.
  • 1.3295 is a strong resistance line.
  • Current range: 1.3175 to 1.3295

Further levels in both directions:

  • Below: 1.3175, 1.3104, 1.2984 and 1.2904
  • Above: 1.3295, 1.3346, 1.3487 and 1.3585

 

OANDA’s Open Positions Ratio

EUR/USD ratio is pointing to gains in long positions in Wednesday trade. This is not consistent with the lack of movement displayed by the pair. The ratio has a majority of long positions, indicative of trader bias towards the euro breaking out and heading to higher ground.

 

EUR/USD Fundamentals

  • 6:00 GfK German Consumer Climate. Estimate 8.9 points. Actual 8.6 points.
  • 6:00 German Import Prices. Estimate -0.1%. Actual -0.4%.
  • 14:30 US Crude Oil Inventories. Estimate 1.1M.

*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.

short-term volatility

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.