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EUR/USD – Little Change Despite Solid German Retail Sales

EUR/USD is almost unchanged in Friday trading, as the pair is trading in the mid-1.30 range in the European session. In economic releases, German Retail Sales looked very sharp. French data was mixed, as Consumer Spending beat the estimate, but PPI came in well below expectations. US releases continue to be positive, as Unemployment Claims was very close to the estimate and Pending Home Sales sparkled, hitting a multi-year high. Over in the US, Friday’s highlight is UoM Consumer Sentiment Index.

It’s  been a very good week for US releases. Earlier in the week, Core Durable Goods, CB Consumer Confidence and New Home Sales, all key releases, beat their estimates. Manufacturing data, often a sore spot, also looked good as the Richmond Manufacturing Index had its best performance since last November. Although GDP figures missed the estimate, the markets didn’t react negatively, as the US dollar held firm against the major currencies. On Thursday, Unemployment Claims fell to 346 thousand, just below the estimate of 347 thousand. Pending Home Sales skyrocketed, posting a gain of 6.7%, its highest since 2006. This crushed the estimate of a 1.1% gain. These solid numbers are particularly encouraging as they come from a wide range of economic sectors. If US indicators continue to point upward, the Federal Reserve could act and start to reduce QE. Such a move would likely have a dramatic positive effect on the US dollar.

Is the US Federal Reserve backtracking on QE? The US dollar surged last week after Federal Reserve Chair Bernard Bernanke said that the Fed was planning to scale down QE. However, US (and global) stock markets fell sharply on the news, and the Fed finds itself trying to contain the damage and calm the nervous markets. Dallas Fed President Richard Fisher declared that “tapering” should not be confused with “tightening” and said that the Fed was not exiting from its accommodative policy action just yet. Minneapolis Fed President Naraya Kocherlakota reiterated that the Fed was continuing with an expansionary monetary policy event if QE was terminated, and said that it was a misperception to assume that the Federal Reserve had turned more hawkish. One can be excused for dismissing these statements as little more than linguistic acrobatics, and it is questionable if the markets will be reassured by these statements from the Fed, which are clearly aimed at damage control and reassuring nervous investors.

Over in the Eurozone, German in indicators got off to a slow start this week, as German Ifo Business Climate, a key indicator, came in slightly below the estimate. However, the news got better as the week progressed. German Consumer Climate climbed to a six-year high, and German Unemployment Claims came in well below the forecast. There was more good news for the markets on Friday, as German Retail Sales climbed 0.8%, surprising the markets which had expected a 0.2% decline. Germany is the largest economy in the Eurozone, and it will have to lead the way if the Eurozone is to pull out of its longest recession since the creation of the economic zone in 1999.


EUR/USD for Friday, June 28, 2013


Forex Rate Graph 21/1/13
EUR/USD June 28 at 9:35 GMT

EUR/USD 1.3054 H: 1.3076 L: 1.3032


EUR/USD Technical

S3 S2 S1 R1 R2 R3
1.2943 1.3000 1.3050 1.3100 1.3161 1.3271


EUR/USD is not showing much movement, as the pair trades in the mid-1.30 range. The pair is testing support at 1.3050, and this line could fall if the dollar shows any strength. Next, there is support at the significant level of 1.3000. On the upside, 1.3100 is providing weak resistance. This is followed by a stronger resistance line at 1.3161.


Further levels in both directions:


OANDA’s Open Positions Ratio

The EUR/USD ratio remains very quiet, continuing the trend we have seen since Wednesday. This is consistent with what we are seeing from the pair, as EUR/USD is showing little movement. A majority of positions in the ratio continue to be short, indicating a strong bias towards the dollar posting further gains against the euro.

The euro continues to trade quietly above the 1.30 line. Will this lack of movement continue? The pair didn’t react to solid German numbers earlier today, but this could change as the US releases consumer confidence numbers later on Friday.


EUR/USD Fundamentals


*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 [4]

Market Analyst at OANDA [5]
A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including Investing.com, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.
Kenny Fisher

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