EUR/USD – Euro Rally Continues, US Markets Closed for MLK Day

The euro has started off the trading week with considerable gains. In the Monday session, EUR/USD is trading at 1.2280, up 0.66% on the day. In economic news, it’s a quiet start to the week. In the eurozone, the trade surplus climbed to EUR 22.5 billion, edging above the estimate of EUR 22.4 billion. In the US, banks and stock markets are closed for Martin Luther King Day, and there are no economic indicators on the schedule.

The euro continues to rally, as EUR/USD has climbed to its highest level since December 2014. On Friday, the pair gained 1.4%, following reports from Germany that Angela Merkel’s conservative bloc and the Social Democrats have agreed on a coalition blueprint. This ends months of political uncertainty,which has eroded Merkel’s standing and also sidelined Germany on issues such as Brexit and political reform in the eurozone. Still, the talks are only in the preliminary stage, and further negotiations will be continuing in the coming weeks. Any coalition deal must be approved by all members of the Social Democrats camp, and this could present a challenge for party head Martin Shulz. The draft which Shulz and Merkel hammered out calls for an annual limit of 220,000 immigrants, and many Social Democrats oppose any cap on immigration.

The dollar lost ground on Friday, as US consumer data for December was lukewarm. CPI slowed to 0.1%, down from 0.4% a month earlier. Core CPI was stronger, improving to 0.3%. Both indicators were within expectations, but pointed to weak inflation levels. On the bright side, consumer spending remained strong. December retail sales, buoyed by Christmas shopping, were up 5.4% compared to a year ago. Although investors were not impressed with the December data, as the euro rally continued, the spending numbers point to a strong finish for the economy in 2017.

Euro remains firm in APAC trade

EUR/USD Fundamentals

Monday (January 15)

  • 5:00 Eurozone Trade Balance. Estimate 22.4B. Actual 

Tuesday (January 16)

  • 2:00 German Final CPI. Estimate 0.6%
  • 2:45 German WPI. Estimate 0.3%
  • 8:30 Empire State Manufacturing Index. Estimate 18.5

*All release times are GMT

*Key events are in bold

EUR/USD for Monday, January 15, 2018

EUR/USD for January 15 at 5:15 EDT

Open: 1.2200 High: 1.2297 Low: 1.2188 Close: 1.2280

EUR/USD Technical

S1 S2 S1 R1 R2 R3
1.1876 1.1961 1.2200 1.2286 1.2357 1.2481

EUR/USD continues to break through resistance levels. On Monday, the pair has posted small gains in the Asian and European sessions

  • 1.2200 is providing support
  • 1.2286 is the next resistance line

Further levels in both directions:

  • Below: 1.2200, 1.1961, 1.1876 and 1.1777
  • Above: 1.2286, 1.2357 and 1.2481
  • Current range: 1.2200 to 1.2286

OANDA’s Open Positions Ratio

EUR/USD ratio is showing little movement in the Monday session. Currently, short positions have a majority (64%), indicative of EUR/USD reversing directions and moving to higher ground.

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.