EUR/USD – Euro Unchanged, Markets Eye Eurozone PMIs

EUR/USD is showing little movement on Tuesday, following strong gains in the Monday session. Currently, the pair is trading at 1.0640. On the release front, it’s another quiet day. The sole Eurozone release is Consumer Confidence, which continues to post sharp declines. The estimate for the October report is -8 points. The US will release Existing Homes, with an estimate of 5.43 million. Wednesday will be much busier, with the release of Manufacturing PMI reports from Germany and the Eurozone. There are a host of key releases in the US, highlighted by Core Retail Sales and the FOMC meeting minutes.

After a nasty streak of ten straight losing daily sessions, EUR/USD rebounded on Monday and climbed 70 points, pushing above the 1.06 level. The euro received a boost after German Chancellor Angela Merkel announced that she would seek a fourth consecutive term. The Brexit vote and Donald Trump’s election has caused a wave of populism, which threatens the unity of Europe. On Monday, the euro dipped below the 1.06 line last week, its lowest level since November 2015. Will the slide continue? The euro is the second-most important currency in the international monetary system, but an ECB report back in June found that the currency’s significance in global trade is on the decline. A chronically weak Eurozone economy, low interest rates and negative yields have all taken a heavy toll on the euro, and there is growing talk of the euro dropping to parity with the high-flying US dollar (the last time the currencies were at parity was in December 2002). Remarkably, EUR/USD was trading at the 1.40 level in May 2014, underscoring the euro’s tremendous decline against the dollar.

The US dollar has posted impressive gains since Donald Trump won the US election earlier this month. With a rate hike in December a near-certainty, sentiment towards the dollar should remain high. However, with a new government taking over the reins, what will happen in early 2017 is a big question mark which could translate into volatility in the markets. Trump’s election promises of more spending and less taxes have been vague and we will have to wait for the new Trump administration to unveil a detailed economic platform. The Federal Reserve is in favor of gradual rate hikes next year, but this assumes that the US economy continues to strengthen. In testimony before a congressional committee last week, Fed chair Janet Yellen acknowledged the uncertainty created by Trump’s victory and said that the Fed might have to adjust its outlook, based on the new president’s economic policies.

EUR/USD Fundamentals

Tuesday (November 22)

• 15:00 Eurozone Consumer Confidence. Estimate -8 points
• 15:00 US Housing Existing Sales. Estimate 5.43M
• 15:00 US Richmond Manufacturing Index. Estimate 1 point

Wednesday (November 23)

• 8:30 German Flash Manufacturing PMI. Estimate 54.8
• 9:00 Eurozone Flash Manufacturing PMI. Estimate 53.2
• 13:30 US Core Durable Goods Orders. Estimate 0.2%
• 13:30 US Unemployment Claims. Estimate 241K
• 15:00 US New Home Sales. Estimate 591K
• 15:00 US Revised UoM Consumer Sentiment. Estimate 91.6
• 19:00 US FOMC Meeting Minutes

*All release times are GMT

* Key events are in bold

EUR/USD for Tuesday, November 22, 2016

EUR/USD November 22 at 9:45 GMT

Open: 1.0637 High: 1.0658 Low: 1.0603 Close: 1.0643

EUR/USD Technical

• EUR/USD has shown limited movement in the Asian and European sessions
• 1.0616 is a weak support line
• There is resistance at 1.0708

Further levels in both directions:

• Below: 1.0616, 1.0506, 1.0414 and 1.0287
• Above: 1.0708, 1.0821 and 1.0957
• Current range: 1.0616 to 1.0708

OANDA’s Open Positions Ratio

EUR/USD ratio is unchanged in the Tuesday session. Currently, short positions have a majority (66%), indicative of trader bias towards EUR/USD breaking out and moving to lower ground.

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.