EUR/USD – Euro Remains Rangebound Despite Strong German Consumer Confidence

EUR/USD is showing little activity on Friday, as the pair continues to trade in the mid-1.26 range. The listless euro didn’t show any reaction as German Consumer Climate improved to 8.4 points. In the US, today’s sole release is New Home Sales. The markets are expecting the indicator to soften this month, with an estimate of 473 thousand.

The week wrapped up on a high note in Germany, as GfK Consumer Climate rose to 8.4 points, up from 8.3 a month earlier. This easily beat the estimate of 8.1 points. Consumer confidence is crucial for stronger economic growth, and the weak Eurozone is very dependent on Germany, the largest economy in the Eurozone. Earlier this week, the Deutsche Bundesbank issued its monthly report. The German central bank said that the German economy showed little growth in the third quarter, as manufacturing production fell and business confidence weakened. At the same time, employment numbers and consumer spending were higher, so German GDP was likely to remain unchanged. As for Q4, the report stated that the outlook is “moderate”. If the euro is to recover from its sharp losses in the past two months, German data will have to improve.

In the US, jobless claims were softer than expected. Unemployment Claims rose to 284 thousand last week, much higher than the previous reading of 264 thousand, and above the estimate of 269 thousand. However, the markets were not too concerned, as the four-week average, which is less volatile than the weekly release, dipped to 281,000, a 14-year low. Meanwhile, weak inflation levels continue to point to slack in the economy. On Wednesday, this trend continued with soft consumer inflation numbers. CPI rose to +0.1%, an improvement from the previous reading of -0.2%. The estimate stood at 0.0%, so the markets clearly did not have high expectations. It was a similar story from Core CPI, which also posted a 0.1% gain, up from 0.0% a month earlier. This was shy of the forecast of 0.2% but still within expectations.

 

EUR/USD for Friday, October 24, 2014

EUR/USD October 24 at 8:50 GMT

EUR/USD 1.2651 H: 1.2665 L: 1.2635

EUR/USD Technical

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

 

  • EUR/USD has been flat in the Asian and European sessions.
  • 1.2688 remains the top of the current range. It is a weak line and could see action during the day. 1.2806 is stronger.
  • 1.2815 continues to provide strong support.
  • Current range: 1.2518 to 1.2688

Further levels in both directions:

  • Below: 1.2518, 1.2407, 1.2286 and 1.2143
  • Above: 1.2688, 1.2806, 1.2905, 1.2984 and 1.3104

 

OANDA’s Open Positions Ratio

EUR/USD ratio is unchanged on Friday. This is consistent with the pair’s current lack of movement. The ratio has a majority of long positions, indicative of trader bias towards the euro breaking out of range and moving higher.

 

EUR/USD Fundamentals

  • 6:00 GfK German Consumer Climate. Estimate 8.1 points. Actual 8.5 points.
  • 8:00 Italian Retail Sales. Estimate 0.2%. Actual -0.1%.
  • Day 2 – EU Economic Summit.
  • 12:30 US Unemployment Claims. Estimate 269K.
  • 13:00 Belgian NBB Business Climate. Estimate -7.8 points.
  • 14:00 US New Home Sales. Estimate 473K.

*All release times are GMT

*Key releases are highlighted in bold.

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.