EUR/USD – Steady as German Consumer Confidence Shines

EUR/USD continues to trade quietly, extending the trend which we’ve seen since last week. In Tuesday’s European session the pair is trading in the high-1.32 range. Taking a look at economic releases, the Eurozone is back in action after a break on Monday. German Consumer Climate edged upwards and posted its highest level in seven years. In Spain, Flash GDP posted another decline, but managed to improve to a seven-month high. Today’s key event is the US CB Consumer Confidence. On Monday, US Pending Home Sales the only release of the day, declined by -0.4%. This weak reading surpassed the estimate of -1.1%.

GFK German Consumer Climate remains strong. The important indicator rose from 6.9 to 7.0 points. This is the highest level since August 2007. We’ll get a further look at the German economy, as German Preliminary CPI is released later on Tuesday, while Retail Sales will be published on Wednesday. German releases have been pointing in both directions, and with general elections in Germany in September, every economic release has added significance and will be under the microscope during the election campaign.

In Spain, we are seeing some better numbers from Eurozone’s fourth largest economy. In June, the unemployment rate dropped from 27.2% to 26.3%. This marked the first monthly decline since July 2011, when the unemployment rate was around 21%. On Tuesday, Flash GDP pointed upwards. The key indicator posted a modest decline of -0.1% for Q1. This was the best result since late 2011. If upcoming releases point to growth, this would be excellent news for the long-suffering economy and could bolster the euro as well.

In the US, consumer confidence looked strikingly similar to Tuesday’s German release. The indicator rose from 84.1 to 85.1 points, its highest level since July 2007. US consumers are clearly feeling good about the economy, but will this translate into stronger spending and more jobs? The markets will have to wait for data from these and other sectors to see if a happier consumer is indeed leading to greater economic activity.

Another vital sector for economic growth is the US housing industry. The picture is somewhat muddled, with releases pointing in all directions. On Monday, Pending Home Sales pointed to a decline of -0.4%, certainly not a strong release. Last week, Existing home sales fell to 5.08 million, way off the estimate of 5.27 million. However, New Home Sales showed strength, jumping from 476 thousand to 496 thousand, easily beating the estimate of 482 thousand. This was its best showing in five years. So where do we stand? With these inconclusive results, the markets will have to wait for the August housing releases, which hopefully will provide a clearer picture of the health and direction of the US housing industry.

 

EUR/USD for Tuesday, July 30, 2013

 

Forex Rate Graph 21/1/13
EUR/USD July 30 at 9:15 GMT

EUR/USD 1.3271 H: 1.3279 L: 1.3248

 

EUR/USD Technical

S3 S2 S1 R1 R2 R3
1.3050 1.3100 1.3162 1.3275 1.3400 1.3476

 

EUR/USD is testing resistance at 1.3275, and this line could fall if the euro can show some strength. The round number of 1.34 is a strong line of resistance. On the downside, the pair is receiving strong support at 1.3162. This is followed by support at 1.31.

  • Current range: 1.3162 to 1.3275

 

Further levels in both directions:

  • Below: 1.3162, 1.3100, 1.3050, 1.3000 and 1.2943
  • Above: 1.3275, 1.34, 1.3476, 1.3585 and 1.3649

 

OANDA’s Open Positions Ratio

EUR/USD ratio is back in action after a lull which started on Friday. On Tuesday, we are seeing movement towards long positions. This is consistent with what we are seeing from the pair, as the euro has posted slight gains against the dollar.

EUR/USD is trading in the high 1.32 range, but has not been able to push across the 1.33 line. With the US releasing key consumer confidence numbers and the markets expecting another strong release ,we could see some movement from the pair during the day.

 

EUR/USD Fundamentals

  • 6:00 GfK German Consumer Climate. Estimate 6.9. Actual 7.0 points.
  • Tentative: German Preliminary CPI. Estimate 0.3%.
  • 7:00 Spanish Flash GDP. Estimate -0.1%, Actual -0.1%.
  • 8:10 Eurozone Retail PMI.
  • Tentative: Italian 10-year Bond Auction.
  • 13:00 US S&P/CS Composite-20 HPI. Estimate 12.4%.
  • 14:00 US CB Consumer Confidence. Estimate 81.1 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.