- MarketPulse - https://www.marketpulse.com -

EUR/USD – Euro Dips Lower, Eurozone Inflation Matches Forecast

The euro is down slightly in the Friday session. Currently, EUR/USD is trading at 1.2048, down 0.17% on the day. On the release front, German Retail Sales sparkled, with a gain of 2.3%. This easily beat the estimate of 1.0%. Eurozone CPI Flash Estimate ticked lower to 1.4%, but matched the forecast. In the US, the focus remains on job data, with the release of Average Hourly Earnings and Nonfarm Payrolls. Wage growth is expected to gain 0.3%, but the markets are braced for a slowdown in Nonfarm Payrolls, with an estimate of 190 thousand. We’ll also get a look at ISM Non-Manufacturing PMI, which is expected to edge up to 57.6 points.

German numbers from December continue to impress the markets. Retail Sales soared 2.3%, its fastest pace since October 2016. Services and Manufacturing PMIs improved and continue to point to strong expansion. The labor market remains robust, as unemployment rolls dropped sharply. The economy hasn’t missed a beat, despite an uncertain political landscape in the eurozone’s largest economy. President Angela Merkel is now looking at the Social Democrats to help her make a new government, and preliminary talks are scheduled to begin on Sunday. The negotiations are likely to be lengthy, and strong disagreements on immigration policy and taxation could unravel the talks, which would trigger new elections.

The highly-anticipated Federal Reserve minutes were released on Wednesday. The minutes provided details of the December policy meeting, where the Fed raised interest rates for a third time in 2018. The minutes were positive in tone, reflecting a robust US economy. Policymakers noted that economic activity was expanding at a “solid pace”, buoyed by improved consumer and business spending, as well as a stronger global economy. FOMC members revised upwards their projection for GDP in 2018, from 2.1% to 2.5%. The minutes noted that new tax reform is expected to raise economic growth, but the Fed is unsure on the impact of the new law in areas such as the labor market. As for inflation, Fed officials remain concerned that inflation levels are well below the target of 2%, and this trend could continue.

EUR/USD Fundamentals

Friday (January 5)

*All release times are GMT

*Key events are in bold

EUR/USD for Friday, January 5, 2018

EUR/USD for January 5 at 5:50 EDT

Open: 1.2068 High: 1.2080 Low: 1.2042 Close: 1.2048


EUR/USD Technical

S1 S2 S1 R1 R2 R3
1.1777 1.1876 1.1961 1.2092 1.2221 1.2357

EUR/USD was flat in the Asian session. The pair has posted small losses in European trade

Further levels in both directions:

OANDA’s Open Positions Ratio

EUR/USD ratio is showing little movement in the Friday session. Currently, short positions have a majority (69%), indicative of 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.

Kenny Fisher

Kenny Fisher [4]

Market Analyst at OANDA [5]
A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including Investing.com, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.
Kenny Fisher

Latest posts by Kenny Fisher (see all [4])