EUR/USD continues to lose ground this week, as the pair trades slightly above the 1.11 line in the Tuesday session. Today’s highlights are the German and Eurozone ZEW Economic Sentiment reports, with the markets expecting both indicators to show improvement for October. There are no major releases out of the US. On Wednesday, the Federal Reserve will release the minutes of its September policy meeting, in which it held rates at 0.25%. As well, FOMC members William Dudley and Esther George will speak at public engagements.
Despite a weak economy and serious concerns about Brexit, the Eurozone Sentix Investor Confidence report was up sharply in October. The indicator improved to 8.5 points, well above expectations and climbing to a 4-month high. Will Tuesday’s ZEW economic confidence reports follow suit? German ZEW Economic Sentiment posted a weak gain of 0.5 points in September, but the markets a much stronger October release, with an estimate of 4.2 points. The Eurozone report is also expected to improve, with a forecast of 6.3 points. If the indicators meet or beat their estimates, the euro, which has dropped close to 200 points this week, could reverse directions and make up some of these losses.
The Federal Reserve will be back in the spotlight on Wednesday, with the release of the policy minutes of the September meeting. At the meeting, three of ten members voted in favor of an immediate rate hike, underscoring growing dissent with the Fed’s cautious monetary stance, which has resulted in zero rate hikes in 2016. The US economy is in good shape, with weak inflation levels being the main sore point. The likelihood of a December rate hike has increased to 65 percent, despite a lukewarm payrolls report for September. As we approach the December policy meeting, key economic indicators will be closely monitored for their effect on a rate move, and unexpected readings could cause strong volatility in the currency markets.
Tuesday (October 11)
- 9:00 German ZEW Economic Sentiment. Estimate 4.2
- 9:00 Eurozone ZEW Economic Sentiment. Estimate 6.3
- 10:00 NFIB Small Business Index. Estimate 95.2
- 14:00 US Labor Market Conditions Index
*All release times are EDT
* Key events are in bold
EUR/USD for Tuesday, October 11, 2016
EUR/USD October 11 at 7:55 GMT
Open: 1.1140 High: 1.1140 Low: 1.1106 Close: 1.1109
- EUR/USD was choppy in the Asian session and has posted slight losses in European trade
- 1.1054 is providing support
- 1.1150 switched to a resistance role following losses by EUR/USD in the Monday session
Further levels in both directions:
- Below: 1.1054, 1.0957 and 1.0821
- Above: 1.1150, 1.1278, 1.1376 and 1.1467
- Current range: 1.1050 to 1.1150
OANDA’s Open Positions Ratio
EUR/USD ratio has reversed directions and is showing gains in long positions. Currently, short positions have a small majority (52%), indicative of very slight trader bias towards EUR/USD continuing to move to lower ground.