EUR/USD – Euro Steady, Shrugs Off Weak CPI Report

EUR/USD has posted gains in the Friday session. Currently, the pair is trading at 1.2329, up 0.20% on the day. On the release front, German Wholesale Price Index declined 0.3%, missing the estimate of +0.2%. Eurozone Final CPI also disappointing, as the reading of 1.1% was shy of the forecast of 1.3%. In the US, key indicators are expected to slow, which could weigh on the US dollar during the North American session. Building Permits and Housing Starts are forecast to drop to 1.32 million and 1.29 million respectively. The markets are also bracing for a drop in UoM Consumer Sentiment, which is expected to slow to 99.2 points.

The eurozone economy has been on the rebound, but inflation levels still remain well short of the ECB target of just under 2 percent. In fact, Eurozone Final CPI has been dropping in recent months, and this worrisome trend continued in February, when the indicator dropped to 1.1%, down from 1.3% a month earlier. This marked the weakest gain since December 2016. On Wednesday, inflation was on the mind of ECB President Mario Draghi, who expressed caution about inflation. Draghi said that the ECB still needed to see evidence that inflation was gaining strength before there could be any talk about a change in monetary policy. In the meantime, the ECB would remain “patient, persistent and prudent”. Stronger economic conditions have led to growing speculation that the ECB will wind up its stimulus program in September. However, there is still plenty of slack in the economy, and coupled with low inflation, Draghi can afford to remain cautious and maintain current monetary policy for some time.

German Chancellor Angela Merkel was elected to a fourth term on Wednesday, but this time she stumbled over the finish line, as opposed to previous wins, when she cruised to victory. Merkel’s stature has diminished after a poor showing in the election back in September, and she will preside over a fractured coalition. Merkel was forced to give the socialist SDP the finance and foreign ministry portfolios, so we can expect the new government to be more supportive of eurozone integration, including assistance for weaker eurozone members.

EUR/USD Fundamentals

Friday (March 16)

  • 3:00 German WPI. Estimate +0.2%. Actual -0.3%
  • 6:00 Eurozone Final CPI. Estimate 1.2%. Actual 1.1%
  • 6:00 Eurozone Final Core CPI. Estimate 1.0%. Actual 1.0%
  • 8:30 US Building Permits. Estimate 1.32M
  • 8:30 US Housing Starts. Estimate 1.29M
  • 9:15 US Capacity Utilization Rate. Estimate 77.7%
  • 9:15 US Industrial Production. Estimate 0.3%
  • 10:00 US Preliminary UoM Consumer Sentiment. Estimate 99.2
  • 10:00 US Preliminary UoM Inflation Expectations
  • 10:00 US JOLTS Job Openings. Estimate 5.91M 

*All release times are GMT

*Key events are in bold

EUR/USD for Friday, March 16, 2018

EUR/USD for March 15 at 6:10 EDT

Open: 1.2305 High: 1.2336 Low: 1.2295 Close: 1.2329

EUR/USD Technical

S1 S2 S1 R1 R2 R3
1.2092 1.2200 1.2286 1.2357 1.2460 1.2581

EUR/USD was flat in the Asian session and has ticked higher in European trade

  • 1.2286 is providing support
  • 1.2357 is the next resistance line

Further levels in both directions:

  • Below: 1.2286, 1.2200 and 1.2092
  • Above: 1.2357, 1.2460, 1.2581 and 1.2660
  • Current range: 1.2286 to 1.2357

OANDA’s Open Positions Ratio

EUR/USD ratio is almost unchanged in the Friday session. Currently, short positions have a majority (58%), 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

Market Analyst at OANDA
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, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.
Kenny Fisher

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