EUR/USD – Euro Climbs to 1.08 as German Economic Sentiment Jumps

EUR/USD has reversed directions on Tuesday and posted moderate gains. Currently, the pair is trading at 1.0770. On the release front, German Preliminary GDP posted a gain of 0.2%, shy of the forecast of 0.3%. Eurozone GDP remained at 0.3%, matching the forecast. There was better news from German ZEW Economic Sentiment, which posted a strong gain of 13.8 points, well above the estimate of 7.9 points. In the US, today’s key numbers are Core Retail Sales and Retail Sales. On Wednesday, the US releases PPI.

The US dollar has posted broad gains after the Trump election last week, which was a stunning result and caused turmoil in the global markets. EUR/USD declined 2.2 percent last week and has posted losses in six straight daily sessions. However, the euro has stropped the slide on Tuesday and has climbed close to the 1.08 line. Market sentiment is currently very favorable towards the dollar, as a Trump presidency (together with a Republican-controlled Congress) could signal a looser fiscal policy and a cut in taxes. This would likely result in greater inflation, which would lead to higher interest rates and hence a stronger dollar. At the same time, Trump is a political enigma, and aside from being “pro-business” he has been very short on specifics with regard to an economic platform. This lack of certainty means the markets could be in for plenty of surprises which could translate into volatility in the currency markets.

With the Federal Reserve policy meeting just a month away, expectations are high that the Fed will press the trigger and raise rates by a quarter-point for the first time in a year. There have been several false starts before, but this time should be different. The Fed has sent out strong signals that it will raise rates, and in the past two rate decisions, some FOMC members voted for an immediate rate hike. The odds of a rate rise currently stand at an impressive 86 percent, so barring some sudden negative data, we’ll see a rate hike before the end of 2016.

EUR/USD Fundamentals

Tuesday (November 15)

• 7:00 German Preliminary GDP. Estimate 0.3%. Actual 0.2%
• 7:45 French Final CPI. Estimate 0.0%. Actual 0.0%
• 9:00 Italian Preliminary GDP. Estimate 0.2%. Actual 0.3%
• 10:00 Eurozone Flash GDP. Estimate 0.3%. Actual 0.3%
• 10:00 German ZEW Economic Sentiment. Estimate 7.9. Actual 13.8
• 10:00 Eurozone Trade Balance. Estimate 22.3B. Actual 24.9B
• 10:00 Eurozone ZEW Eurozone Sentiment. Estimate 14.3. Actual 15.8
• 13:30 US Core Retail Sales. Estimate 0.5%
• 13:30 US Retail Sales. Estimate 0.6%
• 13:30 US Empire State Manufacturing Index. Estimate -1.5
• 13:30 US Import Prices. Estimate 0.4%
• 14:05 US FOMC Member Daniel Tarullo Speech
• 15:00 US Business Inventories. Estimate 0.2%
• 18:30 US FOMC Member Stanley Fischer Speech

Wednesday (November 16)

• 13:30 US PPI. Estimate 0.3%

*All release times are GMT

* Key events are in bold

EUR/USD for Tuesday, November 15, 2016

EUR/USD November 15 at 10:50 GMT

Open: 1.0745 High: 1.0817 Low: 1.0744 Close: 1.0770

EUR/USD Technical

• EUR/USD was flat in the Asian session and has posted gains in European trade
• 1.0708 is providing support
• 1.0821 is a weak resistance line

Further levels in both directions:

• Below: 1.0708, 1.0557 and 1.0462
• Above: 1.0821, 1.0957, 1.1054 and 1.1150
• Current range: 1.0708 to 1.0821

OANDA’s Open Positions Ratio

EUR/USD ratio is unchanged in the Tuesday session. Currently, short positions have a majority (63%), indicative of trader bias towards EUR/USD continuing to move lower.

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.