EUR/USD – Euro Pushes Higher as Trump Speech Misses Mark

EUR/USD has edged higher in the Thursday session, pushing above the 1.06 line. Currently, the pair is trading at 1.0640. On the release front, it’s a busy day in Europe and the US. Eurozone Industrial Production sparkled with a gain of 1.5%, well above the forecast of 0.5%. Later in the day, the ECB will publish the minutes of its December policy meeting. In the US, today’s highlight is unemployment claims, with the indicator expected to rise to 266 thousand. We’ll also hear from two FOMC members – Charles Evans and Patrick Harker. Friday promises to be busy, with the US releasing retail sales and consumer confidence reports.

There was plenty of anticipation ahead of Donald Trump’s press conference on Thursday, but the event quickly turned into a spectacle rather than a platform outlying the president-elect’s plans as president. The markets were hoping to hear some specifics about Trump’s economic policy, but the president-elect didn’t comply. Instead, Trump focused on attacking the media for releasing damaging material on him, and also presented his plan to avoid business conflicts while in office. The markets were clearly disappointed with the theatrics and the US dollar was broadly lower after the press conference.

During the recent presidential campaign, Trump had plenty to say about the ills of the US economy on the campaign trail, but was short on solutions. He has gone on record promising tax cuts and significant fiscal spending to repair the country’s infrastructure. This has led to expectations of reflation in the US, after years of low inflation levels. What does this mean for the currency markets? Lower taxes and higher spending (assuming both can be done simultaneously), would boost the US economy and raise inflation levels. This would likely lead to further rate hikes, which is bullish for the US dollar. The greenback has impressed since the US election, with EUR/USD falling 3.7 percent.

Fed Officials Up Next After Trump Spooks Markets

Lack of Details Unwind the Trumpflation Trade

 

EUR/USD Fundamentals

Thursday (January 12)

  • 7:45 French Final CPI. Estimate 0.3%. Actual 0.3%
  • 9:00 Italian Industrial Production. Estimate 0.2%. Actual 0.7%
  • 10:00 Eurozone Industrial Production. Estimate 0.5%. Actual 1.5%
  • 12:30 ECB Monetary Policy Meeting Accounts
  • 13:30 US Unemployment Claims. Estimate 266K
  • 13:30 US FOMC Member Charles Evans Speech
  • 13:30 US FOMC Member Patrick Harker Speech
  • 13:30 US Import Prices. Estimate 0.8%
  • 15:30 US Natural Gas Storage. Estimate -150B
  • 18:01 US 30-year Bond Auction
  • 19:00 US Federal Budget Balance. Estimate 21.0B

Friday (January 13)

  • 00:00 Federal Reserve Chair Janet Yellen Speech
  • 13:30 US Core Retail Sales. Estimate 0.5%
  • 13:30 US PPI. Estimate 0.1%
  • 13:30 US Retail Sales. Estimate 0.5%
  • 15:00 US Preliminary UoM Consumer Sentiment. Estimate 98.6

*All release times are GMT

*Key events are in bold

EUR/USD for Thursday, January 12, 2017

EUR/USD January 12 at 11:00 GMT

Open: 1.0594 High: 1.0665 Low: 1.0571 Close: 1.0639

EUR/USD Technical

S1 S2 S1 R1 R2 R3
1.0414 1.0506 1.0616 1.0708 1.0873 1.0985
  • EUR/USD was flat in the Asian session and has posted slight gains in European trade
  • 1.0616 is providing weak support
  • 1.0708 is the next resistance level

Further levels in both directions:

  • Below: 1.0616, 1.0506, 1.0414 and 1.0287
  • Above: 1.0708, 1.0873 and 1.0985
  • Current range: 1.0616 to 1.0708

OANDA’s Open Positions Ratio

EUR/USD ratio is unchanged in the Thursday session. Currently, long and short positions are almost evenly split, indicative of a lack of trader bias as to what direction EUR/USD will take next.

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.