EUR/USD – Euro Quiet at Start of Week

The euro has posted small gains in the Monday session. Currently, the pair is trading at 1.2266, up 0.12% on the day. It’s a light economic calendar to start the week, with only one release on the schedule. The US federal budget is expected to rebound and show a large surplus of $50.2 billion. This would mark the first surplus since September. There are no major indicators until Wednesday, when Germany releases Preliminary GDP and Final CPI, and the eurozone releases Flash GDP.

A rebound in the global economy has been a boon for eurozone exports, and this has boosted the bloc’s manufacturing sector. This was underscored by strong manufacturing reports out of France and Italy in December, which were released on Friday. Industrial production in both countries improved compared to November, beating the estimates. The Italian reading of 1.6% marked the strongest gain since August 2016. We’ll get a look at Eurozone Industrial Production on Wednesday. The November reading surged to 1.0%, marking a 3-month high. However, the markets are expecting a small gain of 0.1% in December.

German President Angela Merkel has reached an agreement with the socialist SDP to form a new government, but the price was steep, as the SDP extracted major concessions from Merkel, notably control of the powerful finance ministry. This will likely mark a shift in Germany’s eurozone policy, which had been marked by a conservative stance under former finance minister Wolfgang Schaeuble. The weaker members of the eurozone, such as Greece, will likely find a more sympathetic ear for financial help from the SDP than they did from Schauble. Many conservatives fear that the Olaf Scholz, who is expected to become finance minster, will not be as fiscally responsible as Schaeuble. On the weekend Scholz said that Germany should not dictate economic policies to other eurozone members. The coalition agreement still requires the consent of a majority of the 464,000 members of the SDP, and if the deal is rejected, Germany will likely be headed to new elections.

FX and Equities Brace for a Bumpy Week

EUR/USD Fundamentals

Monday (February 12)

• 14:00 US Federal Budget Balance. Estimate 50.2B

*All release times are GMT

*Key events are in bold

EUR/USD for Monday,  February 12, 2018

EUR/USD for February 12 at 6:30 EDT

Open: 1.2252 High: 1.2298 Low: 1.2242 Close: 1.2266

EUR/USD Technical

EUR/USD edged higher in the Asian session. The pair has reversed directions in European trade and is moving downards

• 1.2200 has switched to a support role after losses by EUR/USD on Tuesday
• 1.2286 is the next resistance line

Further levels in both directions:

• Below: 1.2200, 1.2092 and 1.1961
• Above: 1.2286, 1.2357, 1.2481 and 1.2569
• Current range: 1.2200 to 1.2286

OANDA’s Open Positions Ratio

EUR/USD ratio has shown strong movement towards long positions. Currently, short positions have a majority (57%), indicative of EUR/USD reversing directions and moving higher.

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