EUR/USD – Euro Tumbles on Weak CPI Data

EUR/USD is trading in the high-1.25 range, its lowest level since September 2012. The euro sagged after the release of Eurozone CPI, which dipped 0.3% in September. German news was mixed, as Retail Sales jumped 2.5%, but Unemployment Change was up sharply. The Eurozone unemployment rate was unchanged at 11.5%. In the US, today’s key event is CB Consumer Confidence, with the markets expecting another strong reading above the 90-point level.

The euro has lost over 100 points on Tuesday, as the common currency shows no signs of halting its sharp descent. It’s been a disastrous September for the euro, which has shed over 500 points against the US dollar. The euro reacted sharply to the Eurozone CPI reading of 0.3%, which matched the forecast but was weaker than the 0.4% gain in August. The inflation rate has now been under 1% for twelve straight months, way off the ECB’s target of just below 2%. On Monday, German Preliminary CPI posted a flat reading of 0.0% for the second straight month. The ECB is feeling the pressure to act, but as Mario Draghi knows all too well, there isn’t any magic formula to creating inflation and improving economic growth.

Over in the US, Pending Home Sales posted a decline of 1.0%, compared to last month’s gain of 3.3%. The important housing indicator has shown strong movement, resulting in readings that have been well off market estimates. US housing indicators continue to paint a mixed picture, as New Home Sales jumped last month, while Existing Home Sales softened and was well short of expectations.

EUR/USD for Tuesday, September 30, 2014

EUR/USD September 30 at 10:30 GMT

EUR/USD 1.2579 H: 1.2702 L: 1.2571

EUR/USD Technical

S1 S2 S1 R1 R2 R3
1.2286 1.2407 1.2518 1.2688 1.2806 1.2905

 

  • EUR/USD was flat in the Asian session and tested resistance at 1.2688. The pair has posted sharp losses in European trade.
  • 1.2518 continues to provide support.
  • 1.2688 has some breathing room as the euro trades at lower levels.
  • Current range: 1.2518 to 1.2688

Further levels in both directions:

  • Below: 1.2518, 1.2407, 1.2286 and 1.2144
  • Above: 1.2688, 1.2806, 1.2905, 1.2984 and 1.3104

 

OANDA’s Open Positions Ratio

EUR/USD ratio is pointing to gains in long positions on Tuesday. This is not consistent with the pair’s movement, as the euro has posted strong losses. The ratio has a majority of long positions, indicative of trader bias towards the euro reversing its steep slide and moving upwards.

EUR/USD Fundamentals

  • 6:00 German Retail Sales. Estimate 0.6%. Actual 2.5%.
  • July Data – French Consumer Spending. Estimate -0.3%. Actual -0.7%.
  • 6:45 French Consumer Spending. Estimate -0.2%. Actual +0.7%.
  • 7:55 German Unemployment Change. Estimate -2K. Actual 12K.
  • 8:00 Italian Monthly Unemployment Rate. Estimate 12.6%. Actual 12.3%.
  • 9:00 Eurozone CPI Flash Estimate. Estimate 0.3%. Actual 0.3%.
  • 9:00 Eurozone Core CPI Flash Estimate. Estimate 0.9%. Actual 0.7%.
  • 9:00 Eurozone Unemployment Rate. Estimate 11.5%. Actual 11.5%.
  • 9:00 Italian Preliminary CPI. Estimate -0.3%. Actual -0.3%.
  • 13:00 US S&P Composite-20 HPI. Estimate 7.5%.
  • 13:45 US Chicago PMI. Estimate 61.6 points.
  • 14:00 US CB Consumer Confidence. Estimate 92.2 points.

 

*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.