EUR/USD – Almost Unchanged Ahead of US Inflation, Consumer Consumer Confidence Reports

EUR/USD is listless on Friday, as the pair trades just above the 1.24 line in the European session. In the Eurozone, today’s highlight is Industrial Production. Over in the US, there are two major events – Producer Price Index and the UoM Consumer Sentiment. The inflation index is expected to show a small decline, but the markets are anticipating that the consumer confidence report will continue its upward trend.

US retail sales reports, the primary gauge of consumer spending, looked sharp in November. Core Retail Sales came in at 0.5%, ahead of the estimate of 0.1%. Not to be undone, Retail Sales posted a gain of 0.7%, beating the estimate of 0.4%. This was the indicator’s strongest showing in 12 months. There was more good news on the job front, as Unemployment Claims dipped to 294 thousand, below the forecast of 299 thousand.

The euro showed little response to the ECB’s second TLTRO (Targeted Long Term Refinancing Option) on Thursday. This lending program aims to bolster the economy by increasing bank lending to the real economy. The auction saw European banks take loans of about EUR 130 billion. Although this was higher than the September auction, which had a take-up of EUR 82 billion, the total of around 212 billion was only half of the ECB target of 400 billion. The disappointing figure means that the ECB remains under strong pressure to introduce QE early in 2015, which would likely push the euro to further lows. Meanwhile, the Eurozone continues to struggle with low inflation levels, with a senior ECB official warning of deflation dangers. Speaking in Washington on Tuesday, ECB board member Peter Praet said that falling oil prices could push Eurozone inflation into negative territory.

German numbers have been mixed recently and the trend has continued this week. On Tuesday, Trade Balance climbed to EUR 20.6 billion, marking a 3-month high. This easily beat the estimate of 18.1 billion. On Monday, German Industrial Production didn’t look sharp, posting a weak gain of 0.2%. This was a sharp drop from the 1.4% gain a month earlier. As the Eurozone’s largest economy, the euro is sensitive to German data and could lose more ground if key German data misses expectations.

EUR/USD for Friday, December 12, 2014

EUR/USD December 12 at 8:35 GMT

EUR/USD 1.2422 H: 1.2412 L: 1.2385

EUR/USD Technical

S1 S2 S1 R1 R2 R3
1.2143 1.2286 1.2407 1.2518 1.2688 1.2806

 

  • EUR/USD tested support in the Asian session. The pair has edged higher in European trade.
  • 1.2407 is providing weak support and could break during the day. 1.2286 is stronger.
  • 1.2518 remains a strong resistance line.
  • Current range: 1.2407 to 1.2518

Further levels in both directions:

  • Below: 1.2407, 1.2286, 1.2143, 1.2042 and 119.26
  • Above: 1.2518, 1.2688, 1.2806 and 1.2930

 

OANDA’s Open Positions Ratio

EUR/USD ratio is pointing to gains in long positions on Friday, reversing the trend we have seen for most of the week. This is consistent with the pair’s movement, as the euro has posted small gains. The ratio is pointing to a majority of short positions, indicative of trader towards the pair reversing directions and moving lower.

EUR/USD Fundamentals

  • 7:00 German WPI. Estimate +0.3%. Actual -0.7%.
  • 10:00 Eurozone Industrial Production. Estimate 0.2%.
  • 10:00 Eurozone Employment Change. Estimate 0.2%.
  • 13:30 US PPI. Estimate -0.1%.
  • 13:30 US Core PPI. Estimate 0.1%.
  • 14:55 US Preliminary UoM Consumer Sentiment. Estimate 89.6 points.
  • 14:55 US Preliminary UoM Inflation Expectations.

* 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.