EUR/USD – Euro Higher, Investors Look for Cues

The euro has posted losses in the Monday session. Currently, EUR/USD is trading at 1.2256, up 0.31% on the day. In economic news, it’s a very quiet start to the week. There are no data releases out of the eurozone, and no indicators in the US. On Tuesday, Germany releases ZEW Economic Sentiment, which is expected to rise to 17.8 points.

It’s Day Three of the US government shutdown, which began Friday at midnight when the Senate failed to approve a short-gap spending bill. Without funding, many non-essential government services have been forced to shut down. Democrats and Republicans are now playing the ‘blame game’ and pointing fingers at who is responsible for the crisis. The Democrats refused to vote for the spending measure until a deal is hammered out over Daca, a program for children who are illegal immigrants that Trump has threatened to deport. Lawmakers are scrambling to reach common ground, and on Sunday, Senate majority leader, Mitch McConnell suggested that he would allow a vote on immigration reform in February if Democrats agree to fund the government. With congressional elections looming, both parties will not want to anger voters, so we could see the crisis resolved this week.

The German economy is humming, but the country’s current account and budget surpluses have turned into ‘too much of a good thing.’ A strong demand for German products, record low unemployment and the ECB’s expansionary monetary policy have all contributed to the surpluses. What should be done with all these funds? This was a source of disagreement a recent conference in Frankfurt, hosted by the IMF and German Bundesbank. IMF Managing Director Christine Lagarde suggested that Germany should increase public spending. However, Bundesbank President Jens Weidmann acknowledged that the surpluses may be getting too large, but that increasing public expenditures was not the solution. With the German economy far outpacing its eurozone peers, most of them would likely envy Germany’s quandary over what to do with its large surpluses.

US Shutdown, Earnings and Central Banks in Focus

EUR/USD Fundamentals

Monday (January 22)

  • All Day – Eurogroup Meetings
  • 6:00 German Buba Monthly Report

Tuesday (January 23)

  • 5:00 German ZEW Economic Sentiment. Estimate 17.8
  • 5:00 Eurozone ZEW Economic Sentiment. Estimate 29.7
  • All Day – ECOFIN Meetings
  • 10:00 Eurozone Consumer Confidence. Estimate 1
  • 10:00 US Richmond Manufacturing Index. Estimate 19

*All release times are GMT

*Key events are in bold

EUR/USD for January 22, 2018

EUR/USD for January 22 at 6:30 EDT

Open: 1.2218 High: 1.2274 Low: 1.2214 Close: 1.2255

EUR/USD Technical

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

In the Asian session, EUR/USD posted small gains but then reversed directions and headed lower. The pair has ticked  lower in European trade

  • 1.2200 is providing support
  • 1.2286 is a weak 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 unchanged in the Monday session. Currently, short positions have a majority (64%), indicative of EUR/USD reversing directions and moving to lower 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.