EUR/USD has moved upwards in Tuesday trading, as the pair trades in the low-1.37 range in the European session. The first Eurozone releases of the week failed to impress, as Eurozone and German ZEW Economic Sentiment faltered badly in January and were well off the estimates. Eurozone Current Account continues to impress, beating the forecast for a third straight month. It’s a quiet day in the US, with no major events on the schedule. Monday’s highlight is the Empire State Manufacturing Index, with the markets expecting a weaker reading than in the January release.
Tuesday’s releases were disappointing as German ZEW Economic Sentiment, a key event, slipped to a three-month low, dropping to 55.7 points in January, compared to 61.7 a month earlier. The estimate stood at 61.3. The Eurozone reading followed suit, dropping from 73.3 to 68.5 points, way short of the estimate of 73.9. Although these levels are relatively high, the fact that institutional investors and analysts, who know a thing or two about the economy, are less optimistic is a reason for concern, and a slowing down of the German locomotive would spell serious trouble for the Eurozone.
On Friday, European Preliminary GDP numbers pointed higher. German GDP gained 0.4%, beating the forecast of 0.3%. French GDP was up 0.3%, above the estimate of 0.2%, while the Italian indicator posted its first gain in almost a year, with a gain of 0.1%, matching the estimate. Eurozone Flash GDP followed suit, posting a gain of 0.3%, which edged above the estimate 0.2%. While not dramatic gains, these figures do point to slight growth in the major Eurozone economies. This will be music to the ears of the ECB, which is grappling with low inflation levels and weak economic activity in the Eurozone.
The ECB did not make any moves at is last policy meeting, but there has been increasing talk of negative deposit rates (currently these are at zero), and a few ECB members have gone on the record stating that negative rates are on the table. These sentiments are bearish for the euro, since negative rates would likely lead to investors choosing currencies with more attractive rates. If inflation indicators do not pick up, the ECB my have to take action at its next meeting in March.
EUR/USD for Tuesday, February 18, 2014
EUR/USD February 18 at 11:30 GMT
EUR/USD 1.3733 H: 1.3735 L: 1.3695
- EUR/USD has posted gains in Tuesday trade. The pair has edged higher in the European session.
- 1.3649 continues in a support role. The next support line is at 1.3585.
- 1.3786 is the next line of resistance. This line could face pressure if the euro continues to move higher. Next, there is resistance at 1.3893.
- Current range: 1.3649 to 1.3786
Further levels in both directions:
- Below: 1.3649, 1.3585, 1.3410, 1.3347 and 1.3255
- Above: 1.3786, 1.3893, 1.4000 and 1.4149.
OANDA’s Open Positions Ratio
EUR/USD ratio is showing little change in Tuesday trading. This is not consistent with what we are seeing from the pair, as the euro has posted modest gains. Short positions enjoy a strong majority in the ratio, indicative of trader bias towards the dollar moving higher against the euro.
The euro is looking strong as it trades above the 1.37 line on Tuesday. EUR/USD has edged higher in the European session.
- 9:00 Eurozone Current Account. Estimate 19.8B. Actual 21.3B.
- 9:00 Italian Trade Balance. Estimate 2.79B. Actual 3.62B.
- 10:00 German ZEW Economic Sentiment. Estimate 61.3 points. Actual 55.7 points.
- 10:00 Eurozone ZEW Economic Sentiment. Estimate 73.9 points. Actual 68.5 points.
- All Day ECOFIN Meetings.
- 13:30 US Empire State Manufacturing Index. Estimate 9.9 points.
- 14:00 US TIC Long-Term Purchases. Estimate.28.9B.
- 15:00 US NAHB Housing Market Index. Estimate 56 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.