EUR/USD – Euro Shrugs Off Weak German Confidence Report

It’s been a quiet start to the week for the euro. In the Tuesday session, EUR/USD is trading at 1.1774, up 0.04% on the day. In economic news, German ZEW Economic Sentiment slowed to 17.4, short of the estimate of 17.9 points. Eurozone ZEW Economic Sentiment also softened, with a reading of 29.0. This was short of the 30.2 points. Later in the day, ECB President Mario Draghi speaks at an event in Frankfurt. The US will release PPI, an important inflation indicator. On Wednesday, Germany and the US release CPI reports. As well, the Federal Reserve is expected to raise rates to a range between 1.25% to 1.50%.

The well-respected ZEW Economic Sentiment indicator, a confidence barometer of institutional investors, slowed in December, in both Germany and the eurozone. Still, the readings point to optimism – Germany’s economy continues to look sharp, and this had led the way for the eurozone, which has enjoyed solid growth in 2017. Still, investors have to keep an eye on political developments as well, and there are some worrisome developments. Germany still remains without a government, and uncertainty over Brexit continues to hover over the European Union. The euro has shrugged off the soft ZEW readings, showing little change in the Tuesday session.

The markets are expecting a quarter-point rate hike from the Fed on Wednesday. Even though this move has been priced in, rate hikes tend to trigger a surge of confidence among investors, and also makes the US dollar more attractive against its rivals. Traders should therefore be prepared for the US dollar to record gains after the rate announcement. Another rate hike is expected in January, with fed futures pricing a rate hike at 87%. The Fed has hinted that it could raise rates up to three times in 2018, and this upward movement in rates will likely propel the US dollar upwards. The  US labor market remains at full capacity and various sectors in the economy are reporting a lack of workers. Still, this has not translated into stronger wage growth, despite predictions from Janet Yellen and other Fed policymakers that a lack of workers is bound to push up wages.

EUR/USD Fundamentals

Tuesday (December 12)

  • 1:30 French Final Private Payrolls. Estimate 0.2%. Actual 0.3%
  • 5:00 German ZEW Economic Sentiment. Estimate 17.9. Actual 17.4 
  • 5:00 Eurozone ZEW Economic Sentiment. Estimate 30.2. Actual 29.0
  • 6:00 US NFIB Small Business Index. Estimate 104.6
  • 8:30 US PPI. Estimate 0.4%
  • 8:30 US Core PPI. Estimate 0.2%
  • 13:01 US 30-year Bond Auction
  • 14:00 ECB President Mario Draghi Speaks
  • 14:00 US Federal Budget Balance. Estimate -135.2B

Wednesday (December 13)

  • 2:00 German Final CPI. Estimate 0.3%
  • 2:00 German WPI
  • 5:00 Eurozone Employment Change. Estimate 0.4%
  • 5:00 Eurozone Industrial Production. Estimate -0.2%
  • 8:30 US CPI. Estimate 0.4%
  • 8:30 US Core CPI. Estimate 0.2%
  • 14:00 US FOMC Economic Projections
  • 14:00 US FOMC Statement
  • 14:00 US Federal Funds Rate. Estimate <1.50%
  • 14:00 US FOMC Press Conference

*All release times are GMT

*Key events are in bold

EUR/USD for Tuesday, December 12, 2017

EUR/USD for December 12 at 12:30 EDT

Open: 1.1769 High: 1.1792 Low: 1.1764 Close: 1.1774

EUR/USD Technical

S1 S2 S1 R1 R2 R3
1.1434 1.1574 1.1657 1.1777 1.1876 1.1961

EUR/USD has posted small gains in the Asian and European sessions

  • 1.1657 is providing support
  • 1.1777 remains fluid. Currently it is providing weak resistance

Further levels in both directions:

  • Below: 1.1657, 1.1574 and 1.1434
  • Above: 1.1777, 1.1876, 1.1961 and 1.2092
  • Current range: 1.1657 to 1.1777

OANDA’s Open Positions Ratio

EUR/USD is unchanged in the Tuesday session. Currently, short positions have a majority (54%), indicative of EUR/USD reversing directions and moving downwards.

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.

Kenny Fisher

Kenny Fisher

Currency Analyst at Market Pulse
Kenny Fisher joined OANDA in 2012 as a Currency Analyst. Kenny writes a daily column about current economic and political developments affecting the major currency pairs, with a focus on fundamental analysis. Kenny began his career in forex at Bendix Foreign Exchange in Toronto, where he worked as a Corporate Account Manager for over seven years.