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Home/Currency/EUR/Market Pulse/USD

EUR/USD – Euro Subdued Ahead of Eurozone CPI

April 18, 2018 Share Print 0

EUR/USD is showing limited movement in the Wednesday session. Currently, the pair is trading at 1.2365, down 0.04% on the day. On the release front, the focus is on eurozone inflation indicators. Eurozone Final CPI is expected to climb to 1.4%, while Final Core CPI is forecast to remain unchanged at 1.0%. There are no major events in the US, but we’ll hear from FOMC members Williams and Quarles.

The German and eurozone economies have looked solid in 2018, making soft ZEW Economic Sentiment reports all the more surprising. The April reports were much weaker than expected, but investors shrugged off the numbers as risk appetite remains high. The German release of -8.2 points showed pessimism on the part of institutional investors and analysts and marked the weakest reading since November 2012. The eurozone release of 1.9 was the lowest since July 2o16. The readings are a major disappointment, as the eurozone economy has been performing well and key indicators have been steady. Investors will be hoping that these ZEW releases are one-time blips and that the May readings will be in line with recent releases.

The ECB remains cautious about winding down its stimulus program, and this stance was underscored in last week’s minutes from the March policy meeting. Policymakers pointed to some concerns which could affect plans to end stimulus, which the ECB has had in place for years in order to boost the economy. These include the tariff spat between the US and China, which ECB policymakers stated would hurt “all countries involved.” As well, there is concern that Britain’s departure from the European Union could cause more economic harm than previously expected. At the same time, the eurozone economy continues to perform well and inflation has been steady. This makes it unlikely that the ECB will extend stimulus, but could opt for a longer exit path. As for interest rate policy, no rate hikes are expected anytime soon. Last week, Commerzbank pushed back its forecast for an ECB interest-rate increase by three months to September 2019.

The recent trade battle between the US and China has been overshadowed by events in Syria, but the threat of further tariffs between the world’s largest two economies could again roil the markets and in turn, send gold prices higher. Another salvo was fired on Tuesday, as China slapped a tariff of some 179% on US sorghum crops, which is a livestock feed. China imports about $1 billion of sorghum annually, and the tariff, if it remains in place, will essentially halt US exports of sorghum to China. The Chinese government has threatened to impose tariffs on US soybean exports, valued at some $12 billion each year. If the US opts to retaliate, the specter of an ugly trade war between the US and China could spook investors and push the US dollar higher.

Familiar Themes With Little Inference

 

EUR/USD Fundamentals

 Wednesday (April 18)

  • 5:00 Eurozone Final CPI. Estimate 1.4%
  • 5:00 Eurozone Final Core CPI. Estimate 1.0%
  • Tentative – German 10-year Bond Auction
  • 10:30 US Crude Oil Inventories. Estimate -0.5M
  • 14:00 US Beige Book 
  • 15:15 US FOMC Member William Dudley Speaks
  • 16:15 US FOMC Member Randal Quarles Speaks

 Thursday (April 19)

  • 4:00 Eurozone Current Account. Estimate 32.3B
  • 8:30 US Philly Fed Manufacturing Index. Estimate 20.8
  • 8:30 US Unemployment Claims. Estimate 230K

*All release times are DST

*Key events are in bold

EUR/USD for Wednesday, April 18, 2018

EUR/USD for April 18 at 3:50 DST

Open: 1.2369 High: 1.2382 Low: 1.2348 Close: 1.2365

EUR/USD Technical

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

EUR/USD inched higher in the Asian session. The pair reversed directions and edged lower in European trade

  • 1.2319 is providing support
  • 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 showing limited movement in the Wednesday session. Currently, short positions have a majority (56%), 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.

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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.
Kenny Fisher

+Kenny Fisher

Kenny Fisher

Latest posts by Kenny Fisher (see all)

  • NZD/USD – NZ dollar slides on soft Chinese data - 06/14/2019
  • AUD/USD – Aussie losses continue as Chinese industrial output slides - 06/14/2019
  • FTSE loses traction as Broadcom sends equities lower - 06/14/2019
Eurozone Current Account, Eurozone Final Core CPI, Eurozone Final CPI, German 10-year Bond Auction, US Beige Book, US Crude Oil Inventories, US FOMC Member Randal Quarles, US FOMC Member William Dudley, US Philly Fed Manufacturing Index, US Unemployment Claims
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MarketPulse is a forex, commodities, and global indices analysis news site providing timely and accurate information on major economic trends, technical analysis, and worldwide events that impact different asset classes and investors.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities.

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