EUR/USD – Euro Unchanged Ahead of US Inflation Reports

EUR/USD continues to have an uneventful week. On Tuesday, the pair is trading at 1.2319, down 0.01% on the day. On the release front, there are no major eurozone events. In the US, the focus is on inflation indicators. PPI is expected to edge lower to 0.1%, and Core PPI is forecast to remain unchanged at 0.2%. On Wednesday, ECB President Mario Draghi speaks at an event in Frankfurt. The US releases consumer inflation reports, and the Federal Reserve will publish the minutes of its March rate meeting.

Investors are breathing a sigh of relief after Chinese President Xi Jimping sent out a conciliatory message earlier on Tuesday. Xi was speaking at a development conference in China, and promised to lower tariffs on vehicle imports into China. This has been a major sticking point between the US and China, with President Trump complaining that China has a 25% tariff on US vehicle imports, yet the US only charges 2.5% on Chinese vehicles. Although China has previously declared that it would reduce the tariffs on vehicles, the markets were looking for some positive news, as the trade battle between the two largest economies in the world has shaken the markets in recent weeks. Xi added that China was looking to solve issues through dialogue rather than confrontation, and the markets are hoping that the US and China can avert a trade war, which could drag down the global economy.

US employment numbers ended the week on a mixed note, and the euro gained ground on Friday. US nonfarm payrolls, one of the most important economic indicators, plunged to just 103 thousand, well off the forecast of 188 thousand. Still, the markets do not appear overly concerned, as payroll reports often sag in March. On a more positive note, wage growth improved to 0.3%, matching the forecast. This improvement is likely to reinforce sentiment that the Federal Reserve could press the rate trigger four times in 2018. The Fed has maintained its forecast of three rate increases this year, and an upwards revision could boost the US dollar against the euro and other rivals.

Xi Jinping Announces Plans to Further Open China’s Economy

EUR/USD Fundamentals

 Tuesday (April 10)

  • 2:45 French Industrial Production. Estimate 1.5%. Actual 1.2%
  • 4:00 Italian Industrial Production. Estimate 1.0%. Actual -0.5%
  • 6:00 US NFIB Small Business Index. Estimate 107.0
  • 8:30 US PPI. Estimate 0.1%
  • 8:30 US Core PPI. Estimate 0.2%
  • 10:00 US Final Wholesale Inventories. Estimate 0.8%

 Wednesday (April 11)

  • Tentative – German 30-year Bond Auction
  • 7:00 ECB President Mario Draghi Speaks
  • 8:30 US CPI. Estimate 0.0%
  • 8:30 US Core CPI. Estimate 0.2%
  • 14:00 US FOMC Meeting Minutes

*All release times are DST

*Key events are in bold

EUR/USD for Tuesday, April 10, 2018

EUR/USD for April 10 at 6:05 DST

Open: 1.2321 High: 1.2335 Low: 1.2303 Close: 1.2323

EUR/USD Technical

S1 S2 S1 R1 R2 R3
1.2092 1.2235 1.2319 1.2460 1.2581 1.2662

EUR/USD has shown little movement in the Asian and European sessions

  • 1.2319 was tested earlier in support. It remains under pressure
  • 1.2460 is the next resistance line

Further levels in both directions:

  • Below: 1.2319, 1.2235, 1.2092 and 1.2025
  • Above: 1.2460, 1.2581 and 1.2662
  • Current range: 1.2319 to 1.2460

OANDA’s Open Positions Ratio

EUR/USD ratio is almost unchanged in the Tuesday session. Currently, short positions have a majority (53%), indicative of EUR/USD breaking out 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.