EUR/USD: Slight Losses on Weak German Economic Sentiment

EUR/USD has reversed directions and has posted slight losses on Tuesday. In the European session, the pair is trading just below the 1.36 line. On the release front, German and Eurozone ZEW Economic Sentiment softened in June and missed their estimates. In the US, today’s highlights are Core Retail Sales and Retail Sales. As well, Federal Reserve chair Janet Yellen will begin two days of testimony on Capitol Hill.

More German economic data, more bad news. This seems to be the latest theme from the largest economy in the Eurozone, which continues to post weak data, as underscored in last week’s manufacturing and inflation numbers. On Tuesday, German ZEW Economic Sentiment, a highly regarded report, slipped to 27.1 points, short of the estimate of 28.9 points. The indicator has been falling steadily since last November, when it was above the 60-point level. The July figure is the weakest we’ve seen since November 2012. The Eurozone release brought no relief, as it plunged to 48.1 points, down from 58.4 a month earlier. The estimate stood at 62.3 points. These weak numbers will raise concerns about the health of the German and Eurozone economies, and the euro could lose ground.

Janet Yellen will visit Capitol Hill this week, starting with testimony on Tuesday before the Senate Banking Committee. The Federal Reserve minutes, released last week, did not shed much light on when the Fed plans to raise interest rates, but policymakers did agree to wind up the QE scheme by October. The asset purchase program flooded the economy with over $2 trillion, and the Fed has been steadily reducing the program since last December. Winding down QE, which currently stands at $45 billion/month, will require several more tapers by the Fed, but that shouldn’t pose a problem, as the US economy continues to improve. The markets will be closely following Yellen’s remarks, looking for clues regarding the timing of a rate hike.

EUR/USD for Tuesday, July 15, 2014

EUR/USD July 15 at 10:10 GMT

EUR/USD 1.3594 H: 1.3628 L: 1.3587

EUR/USD Technical

• EUR/USD was steady in the Asian session. The pair has posted modest losses and dropped below the 1.36 line in European trading.
• 1.3585 is providing weak support. 1.3487 is stronger.
• 1.3651 is the next resistance line. 1.3786 is next.
• Current range: 1.3585 to 1.3651

Further levels in both directions:

• Below: 1.3585, 1.3487, 1.3346 and 1.3295
• Above: 1.3651, 1.3786, 1.3893 and 1.40

OANDA’s Open Positions Ratio

EUR/USD ratio is pointing to gains in short positions on Tuesday, continuing the trend seen a day earlier. This is consistent with the movement of the pair, as the euro has posted gains. The ratio has a majority of short positions, indicative of trader bias towards the dollar continuing to post gains against the euro.

EUR/USD Fundamentals

• 9:00 German ZEW Economic Sentiment. Estimate 28.9 points. Actual 27.1 points.
• 9:00 European ZEW Economic Sentiment. Estimate 62.3 points. Actual 48.1 points.
• 12:30 US Core Retail Sales. Estimate 0.5%.
• 12:30 US Retail Sales. Estimate 0.6%.
• 12:30 US Empire State Manufacturing Index. Estimate 17.2 points.
• 12:30 US Import Prices. Estimate 0.5%.
• 14:00 Federal Reserve Chair Janet Yellen Testifies Before Senate Banking Committee.
• 14:00 US Business Inventories. Estimate 0.6%.

*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.