EUR/USD – Euro Lower on Soft French CPI

The euro has posted moderate losses on Thursday, erasing most of the gains seen in the Wednesday session. Currently, EUR/USD is trading at 1.1140. In economic news, French Final CPI declined 0.4%, matching the forecast. Today’s key event is US Unemployment Claims, with the indicator expected to edge higher to 272 thousand. Friday will be busy, with Germany releasing Preliminary GDP, and the US publishing CPI and Retail Sales reports, as well as the UoM Consumer Sentiment report.

Deflation continues to be a major concern for Mario Draghi & Co., as the ECB remains under pressure to adopt further easing measures. Last week’s dramatic moves by the BoE, which lowered rates and expanded asset purchases, has put further pressure on the ECB. France, the number two economy in the Eurozone, saw Final CPI decline 0.4% in July, marking the first decline since January. Germany will release Final CPI on Friday, and if the indicator misses expectations, there will be louder calls for the ECB to take action.

The manufacturing sector in the Eurozone has been hit hard by weak global demand, and the economic instability caused by Britain’s decision to leave the EU could take a further toll, as construction projects may be put on hold during this period of great uncertainty. This week’s manufacturing numbers have looked good, and the trend continued with French Industrial Production. The indicator gained 0.3%, easily beating the forecast of -0.8%. Earlier in the week, German Industrial Production posted a gain of 0.8% in June, rebounding after a sharp decline of 1.3% in the previous release. This figure was just shy of the forecast of 0.9%. At the same, time, German June Factory Orders declined 0.4% and the indicator has failed to post a gain in three months. This points to a deterioration in the manufacturing base of the largest economy in the Eurozone.

US employment numbers looked strong in July, led by a banner Nonfarm Payrolls report. Now, the markets are focusing on the possibility of a September rate hike by the Federal Reserve. Prior to the payrolls release, a September hike was virtually off the table, especially in light of the soft US GDP report in late July. The Fed has made no secret of the fact that any rate move will be data-dependent, and the stellar job numbers will force to Fed to give serious thought to a move in September. Employment and inflation releases in the next few weeks will be critical factors in determining if the Fed makes a move next month, or waits until December before revisiting the rate question.

EUR/USD Fundamentals

Thursday (August 11)

  • 6:45 French Final CPI. Estimate -0.4%. Actual -0.4%
  • 9:00 Italian Trade Balance. Actual 4.66B
  • 12:30 US Unemployment Claims. Estimate 272K
  • 12:30 US Import Prices. Estimate -0.2%
  • 14:00 US Mortgage Delinquencies
  • 14:30 US Natural Gas Storage. Estimate 24B
  • 17:01 US 30-year Bond Auction

* Key releases are in bold

*All release times are GMT

EUR/USD for Thursday, August 11, 2016

EUR/USD August 11 at 10:40 GMT

Open: 1.1185 High: 1.1190 Low: 1.1134 Close: 1.1143

EUR/USD Technical

S1 S2 S1 R1 R2 R3
1.0821 1.0925 1.1054 1.1150 1.1278 1.1376
  • EUR/USD has posted losses in the Asian and European sessions
  •  1.1054 is providing support
  •  1.1150 remains fluid. This line has switched to resistance following losses by EUR/USD and could see further action during the Thursday session

Further levels in both directions:

  • Below: 1.1054, 1.0925 and 1.0821
  • Above: 1.1150, 1.1278, 1.1376 and 1.1467
  • Current range: 1.1054 to 1.1150

OANDA’s Open Positions Ratio

EUR/USD ratio is showing slight gains in short positions. Currently, short positions have a strong majority (61%), indicative of 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.

Kenny Fisher

Kenny Fisher

Market Analyst at OANDA
A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.