EUR/USD – Euro Subdued Ahead of Eurozone CPI, US Retail Sales

The euro is unchanged on Wednesday, as EUR/USD is trading at 1.1220. It’s another quiet day on the release front, with no major events in the Eurozone or the US. French CPI posted a gain of 0.3%, matching the forecast. The US will release Import Prices and Crude Oil Inventories. Thursday promises to be busy, with a host of key events. The Eurozone will publish Final CPI. In the US, Thursday’s highlights are retail sales and unemployment claims.

Eurozone confidence indicators for September, released on Tuesday, disappointed the markets. German ZEW Economic Sentiment remained steady at 0.5 points, falling well short of expectations for a second straight month. With releases above the zero level pointing to optimism, these weak readings show ambiguity about the German economy, the largest in the Eurozone. The Eurozone ZEW Economic Sentiment report improved to 5.7 points, but this reading also missed expectations. Meanwhile, inflation levels remains close to rock bottom. German inflation numbers were a mix, as Final CPI dropped to 0.0% in August, down from 0.3% a month earlier. However, WPI came in at 0.1%, better than the forecast of -0.7%. Eurozone Final CPI, which will be released on Thursday, is expected to remain unchanged at 0.2%.

With a September rate hike unlikely but still on the table, the markets have been paying close attention to comments from FOMC members in connection with the Fed’s monetary policy. On Monday, FOMC member Lael Brainard sounded cautious, saying it would be prudent to maintain a loose monetary policy. Brainard noted global uncertainties and weak inflation as reasons for the Fed not to rush into raising rates. This dovish message was in marked contrast to remarks from FOMC member Eric Rosengren last week, who came out in support of a rate hike, without providing a timeline. Rosengren said that “tightening is likely to be appropriate”, and went as far as to say that the US economy could overheat if the Fed didn’t act soon. These mixed messages certainly haven’t clarified matters, leaving markets players in the dark as to the Fed’s monetary plans with a week to go before a crucial Fed policy meeting. The markets have had few fundamental cues to work with so far this week, but that will change on Thursday, as the US releases retail sales, PPI, the Philly Fed Manufacturing Index and unemployment claims. If these numbers are stronger than expected, speculation about a September hike will rise and the US dollar could gain ground.

EUR/USD Fundamentals

Wednesday (September 14)

• 6:45 French Final CPI. Estimate 0.3%. Actual 0.3%
• 9:00 Eurozone Industrial Production. Estimate -0.8% 
• Tentative – German 30-year Bond Auction
• 12:30 US Import Prices. Estimate -0.2%
• 14:30 US Crude Oil Inventories. Estimate 2.8M

Upcoming Key Events

Thursday (September 15)

• 9:00 Eurozone Final CPI. Estimate 0.2%
• 12:30 US Core Retail Sales. Estimate 0.3%
• 12:30 US PPI. Estimate 0.1%
• 12:30 US Philly Fed Manufacturing Index. Estimate 1.1
• 12:30 US Retail Sales. Estimate -0.1%
• 12:30 US Unemployment Claims. Estimate 262K

*All release times are EDT

* Key events are in bold

EUR/USD for Wednesday, September 14, 2016

EUR/USD September 14 at 8:55 GMT

Open: 1.1241 High: 1.1241 Low: 1.1243 Close: 1.1222

EUR/USD Technical

• EUR/USD was flat in the Asian session. The pair posted small gains in the European session but has retracted
• 1.1278 remains an immediate resistance line
• 1.1150 is providing support

Further levels in both directions:

• Below: 1.1150, 1.1054, 1.0957 and 1.0821
• Above: 1.1278, 1.1376 and 1.1467
• Current range: 1.1150 to 1.1278

OANDA’s Open Positions Ratio

EUR/USD ratio is unchanged on Wednesday, consistent with the lack of movement from EUR/USD. Currently, short positions have a significant majority (58%), indicative of trader bias towards EUR/USD breaking out and moving to lower ground.

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.