EUR/USD – Euro Slips as US Senate Passes Tax Reform

The euro has posted slight losses in the Monday session. Currently, EUR/USD is trading at 1.1847, down 0.47% since the close on Friday. On the release front, Eurozone Sentix Investor Confidence dropped to 31.1, short of the estimate of 32.3 points. Eurozone PPI gained 0.4%, matching the forecast. In the US, today’s sole release is Factory Orders, which is expected to decline 0.3%. On Tuesday, Germany and the eurozone release services PMIs, and the Eurozone will also release retail sales. The US will publish US ISM Non-Manufacturing PMI.

Brexit is on the menu in Brussels, as Britain and the European Union appear close to moving to trade talks. Prime Minister May and European Commission President Jean-Claude Juckner meet later on Monday in Brussels, hoping to move closer to wrapping up the first phase of the talks. May has moved closer to the European’s demands on a divorce bill of around EUR 50 billion, but two items have yet to be resolved. One is the border between the UK (Northern Ireland) and Ireland, which is a member of the EU. The UK will clearly not remain in a customs union with the EU, but Ireland is insistent that there not be a hard border. The second issue is whether the European Court of Justice will have a role protecting European citizens in the UK. The EU is in favor of a role for the court, while many British lawmakers feel that such a move would impinge on British sovereignty.

After some stumbling on Friday, the US Senate passed a tax reform bill on the weekend. The vote was a squeaker, with 51 Republicans voting yes, against 48 Democrats and 1 Republican. The Senate vote is a big win for President Trump, who wants to sign a tax bill before Christmas. The Senate and House must now reconcile their two bills, and the new uniform bill will then have be passed in both houses. Investors are pleased with the bill, and the US dollar has responded to the vote with broad gains.

EUR/USD Fundamentals

Monday (December 4)

  • 3:00 Spanish Unemployment Change. Estimate 54.3K. Actual 7.3K
  • 4:30 Eurozone Sentix Investor Confidence. Estimate 32.3. Actual 31.1
  • 5:00 Eurozone PPI. Estimate 0.4%. Actual 0.4%
  • All Day – Eurogroup Meetings
  • 10:00 US Factory Orders. Estimate -0.3%

Tuesday (December 5)

  • 3:55 German Final Services PMI. Estimate 54.9
  • 4:00 Eurozone Final Services PMI. Estimate 56.2
  • 5:00 Eurozone Retail Sales. Estimate -0.6%
  • 10:00 US ISM Non-Manufacturing PMI. Estimate 59.2

*All release times are GMT

*Key events are in bold

EUR/USD for Monday, December 4, 2017

EUR/USD for December 4 at 5:25 EDT

Open: 1.1861 High: 1.1879 Low: 1.1836 Close: 1.1847

EUR/USD Technical

S1 S2 S1 R1 R2 R3
1.1574 1.1657 1.1777 1.1876 1.1961 1.2092

EUR/USD was flat in the Asian session and is showing little movement in European trade

  • 1.1777 is providing support
  • 1.1876 was tested earlier in resistance and is a weak line

Further levels in both directions:

  • Below: 1.1777, 1.1657 and 1.1574
  • Above: 1.1876, 1.1961, 1.2092 and 1.2193
  • Current range: 1.1777 to 1.1876

OANDA’s Open Positions Ratio

EUR/USD is showing little movement in the Monday session. Currently, short positions have a majority (60%), indicative of EUR/USD continuing to head downwards.

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.