EUR/USD – Euro Under Pressure as German Inflation Misses Estimate

EUR/USD has lost ground in the Friday session. Currently, the pair is trading at 1.2299, down 0.40% on the day. On the release front, there are no major events. German PPI improved to 0.1%, but this fell short of the estimate of 0.2%. Later in the day, the eurozone releases consumer confidence, which is expected to remain at zero for a third straight month.

The German and eurozone economies have been performing well in 2018, but inflation levels remained low in March. German PPI improved from -0.1% to 0.1%, but missed the estimate of 0.2%. Final CPI came in at 1.3%, up from 1.1% a month earlier. Still, the reading fell short of the estimate of 1.4%. With inflation well below the ECB inflation target of around 2%, there is little pressure on the ECB to tighten its accommodative monetary policy. The ECB’s stimulus program is scheduled to wind up in September, but an increase in interest rates is unlikely before 2019.

Investors are keeping a close eye on the ECB, which meets next week for a policy meeting. Despite stronger economic conditions in the eurozone, the ECB has been in cautious mode. At the March meeting, policymakers took a small step, dropping a pledge to increase stimulus if needed. Will we see additional ‘baby’ steps at the April meeting? The markets are not expecting any change in forward guidance, and concerns over recent trade disputes could mean a dovish statement from ECB President Mario Draghi. Traders shouldn’t expect any dramatic moves next week, as the bank will likely continue to preach patience and prudence.

Where do we go from here ?

EUR/USD Fundamentals

 Friday (April 20)

  • 2:00 German PPI. Estimate 0.2%. Actual 0.1%
  • All Day – OPEC-JMMC Meetings
  • 7:30 German Buba President Weidmann Speaks
  • 10:00 Eurozone Consumer Confidence. Estimate 0 points
  • 11:15 US FOMC Member John Williams Speaks

*All release times are DST

*Key events are in bold

 

EUR/USD for Friday, April 20, 2018

EUR/USD for April 20 at 6:00 DST

Open: 1.2346 High: 1.2353 Low: 1.2295 Close: 1.2299

 

EUR/USD Technical

S1 S2 S1 R1 R2 R3
1.2025 1.2092 1.2235 1.2319 1.2460 1.2581

EUR/USD showed little movement in the Asian session and has lost ground in European trade

  • 1.2235 is providing support
  • 1.2319 has switched to a resistance line after losses by EUR/USD

Further levels in both directions:

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

OANDA’s Open Positions Ratio

EUR/USD ratio is almost unchanged in the Friday session. Currently, short positions have a majority (60%), 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.