The euro continues to gain ground in the Tuesday session, and EUR/USD is currently trading at 1.1040. On the release front, Eurozone Flash GDP climbed 0.5%, matching the forecast. German ZEW Economic Sentiment disappointed, as the reading of 20.6 fell short of the forecast of 22.3 points. There was better news from Eurozone ZEW Economic Sentiment, which jumped to 35.1, easily beating the forecast of 29.1 points. In the US, today’s key events are Building Permits and Housing Starts. On Wednesday, the eurozone releases Final CPI, which is expected to rise to 1.9%.
Market forecasts for Eurozone growth were on the money, as Flash GDP came in at 0.6% in the first quarter of 2017. The gain of 0.5% matched the Preliminary GDP release back in April. The eurozone continues to show improved numbers in 2017, boosted in no small part by the German economy, which also expanded 0.6% in the first quarter. The well-respected ZEW Economic Sentiment surveys, which gauge optimism among investors and analysts, were a mixed bag for May. The German indicator improved to 20.6, short of expectations. What was more surprising was the unexpected jump from the Eurozone indicator, which improved to 35.1, its strongest level in almost two years. With the eurozone showing stronger growth, has inflation kept up? We’ll get an indication on Wednesday, with the release of Eurozone Final CPI, which is expected to rise to 1.9%. Stronger inflation levels will increase pressure on the ECB to consider tapering its ultra-loose monetary policy. Germany, for one, is finding that ultra-low interest rates is hampering growth, and wants Brussels to adopt a tighter monetary policy.
Washington remains abuzz over Comeygate, which has put the Trump administration on the defensive. There was more bad news for President Trump on Tuesday, with a report in the Washington Post that Trump had shared confidential intelligence reports with Russia’s foreign minister at a meeting last week. The White House has denied the report, but clearly damage control remains a top priority for Trump, and the euro has taken advantage, pushing past 1.10, as EUR/USD is trading at 6-month highs. The markets are concerned that Trump will be so busy trying to put out political firestorms, that his agenda of increased fiscal spending and tax reform will stall. This could send the dollar to lower levels as investors look for alternatives to investing in dollar assets.
Tuesday (May 16)
- 2:45 French Final CPI. Estimate 0.1%. Actual 0.1%
- 4:00 Italian Preliminary GDP. Estimate 0.2%. Actual 0.2%
- 5:00 Eurozone Flash GDP. Estimate 0.5%. Actual 0.5%
- 5:00 German ZEW Economic Sentiment. Estimate 22.3. Actual 20.6
- 5:00 Eurozone Trade Balance. Estimate 18.8B. Actual 23.1B
- 5:00 Eurozone ZEW Economic Sentiment. Estimate 29.1. Actual 35.1
- 8:30 US Building Permits. Estimate 1.27M
- 8:30 US Housing Starts. Estimate 1.26M
- 9:15 US Capacity Utilization Rate. Estimate 76.3%
- 9:15 US Industrial Production. Estimate 0.4%
- 10:00 US Mortgage Delinquencies
Wednesday (May 17)
- 5:00 Eurozone Final CPI. Estimate 1.9%
*All release times are EDT
*Key events are in bold
EUR/USD for Tuesday, May 16, 2017
EUR/USD Tuesday, May 16 at 6:15 EDT
Open: 1.0980 High: 1.1050 Low: 1.0979 Close: 1.1043
EUR/USD was flat in the Asian session and has posted gains in European trade
- 1.0985 is providing support
- 1.1122 is the next resistance line
Further levels in both directions:
- Below: 1.0985, 1.0873, 1.0708 and 1.0616
- Above: 1.1122, 1.1242 and 1.1366
- Current range: 1.0985 to 1.1122
OANDA’s Open Positions Ratio
EUR/USD ratio is showing gains towards short positions, consistent with strong gains from EUR/USD which has covered long positions. Currently, short positions have a majority (66%), indicative of EUR/USD continuing to move higher.