EUR/USD – Limited Movement Ahead of US Data

EUR/USD is showing little movement on Wednesday, as the pair trades in the mid-1.26 range in the European session. On the release front, German CPI was unchanged at 0.0%. ECB President Mario Draghi will speak at two ECB events in Frankfurt. In the US, we’ll get a look at the first major events of the week – Core Retail Sales, Retail Sales and PPI.

It’s been a rough week for Eurozone releases. German ZEW Economic Sentiment, a key indicator, dropped sharply to -3.6 points. This reading was the first contraction since October 2012 and points to pessimism among investors and analysts. There was no relief from Eurozone data, as ZEW Economic Sentiment dropped to just 4.1 points, compared to 14.2 a month earlier. Industrial Production came in at -1.8%, its third decline in four readings. The Eurozone continues to struggle, and we’re likely to see the downward trend continue, which bodes badly for the struggling euro.

The US dollar has enjoyed a superb run at the expense of the euro, gaining some 500 points since the start of September. However, the greenback’s rally was interrupted by last week’s FOMC minutes, which were unexpectedly dovish. In the minutes, the Fed poured some cold water on rising expectations of a rate hike, as a number of policymakers said that the Federal Reserve should take a more data-dependent approach regarding a rate hike. The Fed also voiced concern about the rising strength of the US dollar which could weigh on the recovery. On the weekend, FOMC member Stanley Fischer said that the Fed could slow tightening if global growth is weaker than expected. Strong US numbers have raised expectations about a rate hike, but the Fed appears to be taking a cautious approach towards the timing of a rate hike. Still, with QE set to wind up by the end of the month, rising speculation about higher rates bodes well for the US dollar.

EUR/USD for Wednesday, October 15, 2014

EUR/USD October 14 at 7:30 GMT

EUR/USD 1.2641 H: 1.2661 L: 1.2625

EUR/USD Technical

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

 

  • EUR/USD has showed little movement in the Asian and European sessions.
  • 1.2518 remains a strong support line.
  • 1.2688 is a weak resistance line. 1.2806 is stronger.
  • 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 almost unchanged on Wednesday. This is consistent with the lack of movement displayed by the pair. The ratio has a slight majority of long positions, indicative of slight trader bias towards the euro breaking out and moving higher against the dollar.

 

EUR/USD Fundamentals

  • 6:00 German Final CPI. Estimate 0.0%. Actual 0.0%.
  • 7:00 ECB President Mario Draghi Speaks.
  • 12:30 US Core Retail Sales. Estimate 0.2%.
  • 12:30 US PPI. Estimate 0.1%.
  • 12:30 US Retail Sales. Estimate -0.1%.
  • 12:30 US Core PPI. Estimate 0.1%.
  • 12:30 US Empire State Manufacturing Index. Estimate 20.3 points.
  • 14:00 US Business Inventories. Estimate 0.4%.
  • 18:00 ECB President Mario Draghi Speaks.
  • 18:00 US Beige Book.
  • 18:00 US Federal Budget Balance. Estimate 82.3B.

* 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.