EUR/USD – Euro Stable, German Economic Sentiment Jumps

EUR/USD continues to show little movement this week, as the pair trades at the 1.16 line on Tuesday. On the release front, German ZEW Economic Sentiment jumped to 48.4 points, well above expectations. However, German PPI disappointed with a decline of 0.7%. There are no major releases out of the US on Tuesday.

There was excellent news out of Germany, as ZEW Economic Sentiment climbed to 48.4 points, crushing the estimate of 40.1 points. This marked the indicator’s highest level in 11 months, pointing to strong optimism among German investors and analysts. Eurozone Economic Sentiment, improving to 45.2 points. This easily surpassed the forecast of 37.6 points. The news was not as positive on the inflation front, as German PPI dropped 0.7%, its worst showing since April 2009. With the Eurozone struggling with deflation, there is growing expectation that the ECB will announce a QE package at its policy meeting on Thursday.

It’s been less than a week since the SNB stunned the markets by suddenly removing the cap with the euro. This resulted in the euro recording sharp losses against the Swiss franc and the US dollar. However, the markets have had to quickly change focus, as there is growing anticipation that the ECB will announce a QE package on Thursday, when the ECB meets for a crucial policy meeting. The Eurozone has been plagued by deflation and weak growth, and the SNB shocker only reinforces the belief that the ECB will finally make a move. Even if QE has been priced in, there’s no way to know the size of such a scheme, so traders could be in for plenty of volatility from EUR/USD later in the week.

EUR/USD for Tuesday, January 20, 2015

EUR/USD January 20 at 10:05 GMT

EUR/USD 1.1592 H: 1.1614 L: 1.1568

 

EUR/USD Technical

S1 S2 S1 R1 R2 R3
1.1340 1.1426 1.1525 1.1634 1.1734 1.1802

 

 

  • EUR/USD has shown little movement in the Asian or European sessions. The pair has touched a high of 1.1614, putting pressure on resistance at 1.1634.
  • 1.1525 is an immediate support level.
  • 1.1634 is a weak resistance line. 1.1734 is stronger.
  • Current range: 1.1525 to 1.1634

Further levels in both directions:

  • Below: 1.1525, 1.1426, 1.1340 and 1.1154
  • Above: 1.1634, 1.1734, 1.1802, 1.1926 and 1.2042

OANDA’s Open Positions Ratio

EUR/USD is unchanged on Tuesday. This is consistent with the lack of the movement from the pair. The ratio currently has a majority of short positions, indicative of trader bias towards the euro resuming its losing ways.

EUR/USD Fundamentals

  • 7:00 German PPI. Estimate -0.3%. Actual -0.7%.
  • 9:03 Italian Trade Balance. Estimate 4.32B. Actual 3.54B.
  • 10:00 German ZEW Economic Sentiment. Estimate 40.1 points. Actual 48.4 points.
  • 10:00 Eurozone ZEW Economic Sentiment. Estimate 37.6 points. Actual 45.2 points.
  • 15:00 US FOMC Member Jerome Powell Speaks.
  • 15:00 US NAHB Housing Market Index. Estimate 58 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.