EUR/USD – Euro Quiet, Markets Eye CPI

EUR/USD is unchanged in the Tuesday session, as the pair trades at 1.0650. There are no eurozone events on the schedule. In the US, there are two key releases – Building Permits and Housing Starts. On Wednesday, the eurozone releases Final CPI.

It’s been a quiet start for the euro this week. European markets were closed for Easter Monday, and the euro has shown little movement on Tuesday. The markets are awaiting the release of Eurozone Final CPI for March. CPI has improved over six straight months, and the February reading of 2.0% was noteworthy as it reached the ECB inflation target. This strong figure has raised speculation that if inflation levels continue to move higher, the ECB may have to consider tightening policy in order to curb inflation. However, the markets are expecting the March reading to drop to 1.5%, which would allow the ECB to hold its monetary course. The ECB’s asset-purchase program is scheduled to remain in place until December, although the central bank could opt to bring up that date or taper the program if growth and inflation numbers in the eurozone are unexpectedly strong. There are also political considerations at play, as the ECB is reluctant to make any significant monetary moves with upcoming elections in France and Germany.

In the US, consumer indicators wrapped up last week on a sour note. CPI declined 0.3%, and Core CPI dropped 0.1%, as both indicators missed their estimates. Consumer spending was no better, as Retail Sales and Core Retail Sales also missed estimates with readings of 0.2% and 0.0%, respectively. Earlier in the week, UoM Consumer Sentiment improved to 98.0, beating expectations and hitting a 3-month high.What is unusual is this data is that consumer confidence levels improved in March, yet consumer spending declined. The US consumer behavior continues to be marked by a “hard/soft discrepancy”, as confidence levels (“soft data”), has not translated into actual spending numbers (“hard data”). The odds of a June rate hike from the Fed has fallen to 46%, down from 64% earlier in April. Janet Yellen & Co. will likely want to see stronger inflation numbers before pressing the rate trigger.   

Tuesday (April 18)

• 12:30 US Building Permits. Estimate 1.25M
• 12:30 US Housing Starts. Estimate 1.25M
• 13:15 US Capacity Utilization Rate. Estimate 76.3%
• 13:15 US Industrial Production. Estimate 0.5%

Wednesday (April 19)

• 9:00 Eurozone Final CPI. Estimate 1.5%

*All release times are EST

*Key events are in bold

EUR/USD for Tuesday, April 18, 2017

EUR/USD April 18 at 5:00 EST

Open: 1.0643 High: 1.0656 Low: 1.0637 Close: 1.0650

EUR/USD Technical

EUR/USD has been flat in the Asian and European sessions

• 1.0616 is providing support
• 1.0708 is the next resistance line

Further levels in both directions:

• Below: 1.0616, 1.0506, 1.0340 and 1.0214
• Above: 1.0708, 1.0873 and 1.0985
• Current range: 1.0616 to 1.0708

OANDA’s Open Positions Ratio

In the Tuesday session, EUR/USD ratio is showing long positions with a majority (61%). This is indicative of trader bias towards EUR/USD moving upwards.

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.