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EUR/USD – Lower as Eurozone CPI Dips

EUR/USD is steady on Wednesday, as the pair trades in the mid-1.24 range in the European session. On the release front, Eurozone CPI edged lower to 0.3%, matching the forecast. In the US, the FOMC will release its policy statement, and we’ll get a look at November CPI. The markets are expecting a small decline of 0.1%.

The Federal Reserve will be in the spotlight on Wednesday, as the FOMC issues its monthly policy statement. With the US economy continuing to grow, the markets are confident that the Fed will take action and raise interest rates in the first half of 2015. One key question is whether the Fed will adjust its forward guidance; that is, will the Fed make use of policy statements to provide the markets with more information about its projections regarding interest rate policy. If this does occur, there will be less uncertainty about the Fed’s monetary policy and this could boost the US dollar against its major rivals.

Eurozone inflation remains at low levels, and there were no surprises as Eurozone CPI dipped to 0.3% in November, down from 0.4% a month earlier. Persistent efforts from the ECB have not improved matters, and the danger of deflation has risen with the crash in oil prices. Germany, the locomotive of the Eurozone, has not been immune to weak inflation, with German Final CPI coming in at a flat 0.0% in November.

The week started off on a positive note in the Eurozone, as German Manufacturing PMI improved to 51.2 points, up from 50.0 points a month earlier. A reading above the 50-point level indicates expansion. The Eurozone released improved to 50.8 points, up from 50.4 points. French Manufacturing PMI showed little change, coming in at 47.9 points. The index has been under 50 since April, indicative of ongoing contraction. Services PMIs were mixed, as the German release weakened, while the Eurozone and French readings improved.

 

EUR/USD for Wednesday, December 17, 2014

EUR/USD December 17 at 10:50 GMT

EUR/USD 1.2450 H: 1.2515 L: 1.2449

EUR/USD Technical

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

 

Further levels in both directions:

 

OANDA’s Open Positions Ratio

EUR/USD ratio is pointing to gains in short positions on Wednesday, reversing the direction we saw a day earlier. This is consistent with the pair’s movement, as the euro has posted losses. The ratio is close to a split between long and short positions, indicative of a lack of trader bias towards the next move the euro will take.

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]

Currency Analyst at Market Pulse [5]
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.