EUR/USD – Euro Reverses Slide, Climbs to 1.20

After three losing sessions, EUR/USD has reversed course in the Wednesday session. Currently, EUR/USD is trading at 1.1993, up 0.47% on the day. On the release front, there are no German or eurozone indicators. French Industrial Production disappointed, posting a decline of 0.5%, edging below the estimate of -0.4%. In the US, today’s key event is Import Prices. On Thursday, the eurozone releases Industrial Production and the ECB will publish the minutes of the December policy meeting.

The unemployment rate in the eurozone declined steadily in 2017, and the December reading dropped to 8.7%. This marked its lowest level since March 2009, when the rate stood at 8.5%. This is yet another indication of the impressive rebound in the eurozone economy, as growth has been steady and the employment picture has improved. Retail Sales, the primary gauge of consumer spending, posted a strong gain of 1.5% in December, after a decline of 1.1% in November. The euro has received a boost from the strong numbers, gaining 2.7% since November 1. Fourth-quarter numbers have been solid, and the positive trend is expected to continue in early 2018.

When the Federal Reserve is in the headlines, it’s usually on the topic of interest rates. However, another important parameter is the Fed balance sheet, which has ballooned to $4.2 trillion. Starting this month, the Fed will reduce its portfolio, which grew tremendously during the financial crisis of 2008-2009. However, a strong US economy has allowed the Fed to begin trimming the balance sheet. Incoming Fed Chair Jerome Powell, who takes over in February, has estimated that the balance sheet could drop to anywhere between $2.4 trillion to $2.9 trillion after several years of cuts. Fed policymakers have not indicated a magic number for the balance sheet, but the cuts indicate a vote of confidence in the US economy.

EUR/USD Fundamentals

Wednesday (January 10)

• 2:45 French Industrial Production. Estimate -0.4%. Actual -0.5%
• Tentative – German 10-year Bond Auction
• 8:30 US Import Prices. Estimate 0.4%
• 10:00 US Final Wholesale Inventories. Estimate 0.7%
• 10:30 US Crude Oil Inventories. Estimate -3.9M
• 13:01 US 10-year Bond Auction

Thursday (January 11)

• 5:00 Eurozone Industrial Production. Estimate 0.8%
• 7:30 ECB Monetary Policy Meeting Accounts
• 8:30 US PPI. Estimate 0.2%
• 8:30 US Core PPI. Estimate 0.2%
• 8:30 US Unemployment Claims. Estimate 246K

*All release times are GMT

*Key events are in bold

EUR/USD for Wednesday, January 10, 2018

EUR/USD for January 10 at 6:45 EDT

Open: 1.1937 High: 1.1999 Low: 1.1923 Close: 1.1994

EUR/USD Technical

EUR/USD has showed little movement in the Asian session and has posted gains in European trade

• 1.1876 is providing support
• 1.1961 is the next resistance line

Further levels in both directions:

• Below: 1.1876, 1.1777 and 1.1657
• Above: 1.1961, 1.2092, 1.2221 and 1.2357
• Current range: 1.1876 to 1.1961

OANDA’s Open Positions Ratio

EUR/USD ratio is showing movement towards long positions. Currently, short positions have a majority (60%), indicative of EUR/USD breaking out and moving 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.