EUR/USD – Euro Under Pressure Ahead of US Retail Sales, PPI

EUR/USD has posted considerable losses on Wednesday, continuing the downward trend which marked the pair in the Tuesday. The euro is trading at 1.1340 in the European session. On the release front, French Final CPI posted a gain of 0.7%, matching the forecast. Eurozone Industrial Production posted a sharp decline of 0.8%. Later in the day, the US releases three key events – Core Retail Sales, Retail Sales and PPI. The markets are expecting all three indicators to improve over last month’s readings.

One of the biggest problems affecting the Eurozone economy has been persistently weak inflation levels, which have underscored the lack of growth in the economy. However, this week has seen some positive news on the inflation front from the two largest economies in the bloc. French Final CPI posted a strong gain of 0.7% in March, its strongest gain in 12 months. Earlier in the week, German Final CPI improved 0.8%, which also marked a 12-month high. German WPI broke a nasty streak of 7 declines, posting a gain of 0.3%. We’ll get a look at Eurozone CPI numbers on Thursday, and if these readings are above expectations, the euro could gain ground. Strong inflation numbers are welcome news for the ECB, which has made significant monetary moves in 2016 but has little to show for it. The ECB holds its monthly policy meeting next week, and the markets will be closely monitoring inflation and other key releases, looking for clues as to what moves, if any, Draghi & Co. could announce next week.

After a quiet start to the week, the markets will finally get a look at some key US data later on Wednesday. The US will release Retail Sales, the primary gauge of consumer spending, as well as PPI, which measures inflation in the manufacturing sector. All three indicators are expected to rebound with gains in the March reports, after posting declines in February. These releases will be followed by CPI on Thursday. These consumer spending and inflation releases could play an important role concerning the Federal Reserve’s decisions regarding rate hikes. The Fed, which has sent out a decidedly dovish message about the US economy, has greatly lowered expectations about a rate hike in April, but a move in June is still on the table. Although US inflation levels have shown some improvement, they are nowhere near the Fed target of 2.0%. If this week’s inflation numbers beat expectations, speculation about a June hike will quickly gather steam.

EUR/USD Fundamentals

Wednesday (April 13)

• 6:45 French Final CPI. Estimate 0.7%. Actual 0.7%
• 9:00 Eurozone Industrial Production. Estimate -0.6%. Actual -0.8%
• 12:30 US Core Retail Sales. Estimate 0.4%
• 12:30 US PPI. Estimate 0.3%
• 12:30 US Retail Sales. Estimate 0.1%
• 12:30 US Core PPI. Estimate 0.1%
• 14:00 US Business Inventories. Estimate 0.1%
• 14:30 US Crude Oil Inventories. Estimate 0.9M
• 17:01 US 10-year Bond Auction
• 18:00 US Beige Book

Upcoming Key Events

Thursday (April 14)

• 9:00 Eurozone Final CPI. Estimate -0.1%
• 12:30 US CPI. Estimate 0.2%
• 12:30 US Core CPI. Estimate 0.2%
• 12:30 US Unemployment Claims. Estimate 270K

*Key events are in bold

*All release times are GMT

EUR/USD for Wednesday, April 13, 2016

EUR/USD April 13 at 9:10 GMT

Open: 1.1382 Low: 1.1338 High: 1.1391 Close: 1.1345

EUR/USD Technical

• EUR/USD posted small losses in Asian session and continues to lose ground in the European session
• 1.1378 remains fluid and has switched to a resistance role. It was tested earlier and remains a weak line
• 1.1278 is providing support

Further levels in both directions:

• Below: 1.1278, 1.1172 and 1.1087
• Above: 1.1378, 1.1495, 1.1609 and 1.1712
• Current range: 1.1378 to 1.1495

OANDA’s Open Positions Ratio

EUR/USD ratio has shown little movement on Wednesday. Short positions have a strong majority (63%), indicative of strong trader bias towards EUR/USD continuing to move to lower levels.

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.