EUR/USD – Steady Euro Shrugs off Soft German Retail Sales

EUR/USD has started the week with small losses. In the Monday session, the pair is trading at 1.2118, down 0.10% on the day. On the release front, German Retail Sales declined 0.6%, well off the estimate of 0.8%. Later in the day, Germany releases Preliminary CPI, with an estimate of -0.1%. In the US, Personal Spending is expected to improve to 0.4%, while Pending Homes is forecast to slip to 0.6%. On Tuesday, the US releases ISM Manufacturing PMI.

The US released the first GDP report for the first quarter, with a respectable gain of 2.3% which beat the estimate of 2.0 percent. Still, this was a significant drop from GDP in the fourth quarter of 2018, which came in at 2.8 percent. Analysts also took note of the Employment Cost Index, which rose from 0.6% to 0.8%, another indication that inflation is moving higher. There is growing sentiment that the Federal Reserve will raise interest rates four times this year, although Fed policymakers continue to project a total of three increases in 2018. One scenario envisions the Fed raising rates once each quarter until the economy shows signs of slowing down. If inflation continues to move higher and economic conditions remain strong, the dollar should continue to perform well against the euro and other major currencies.

The euro had a disappointing week, losing 1.2% percent. Investors were not impressed with the drab announcement from the ECB on Thursday, as the bank held the course with its monetary policy and guidance. The rate statement said that “the Governing Council expects the key ECB interest rates to remain at their present levels for an extended period of time, and well past the horizon of the net asset purchases”. The stimulus program of EUR 30 billion/month is scheduled to remain in place until September, so investors shouldn’t even think about an interest rate hike until sometime in 2019. In his press conference, Mario Draghi said that the eurozone economy had slowed in the first quarter, but expressed “caution tempered by an unchanged confidence” that the ECB would realize its target of around 2 percent inflation. Although the ECB has said that it plans to wind up stimulus in September, this is not a date set in stone – if second-quarter numbers are not strong, the ECB could continue to the stimulus scheme into 2019.

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EUR/USD Fundamentals

 Monday (April 30)

• 2:00 German Retail Sales. Estimate 0.8%. Actual -0.6%
• All Day – German Preliminary CPI. Estimate -0.1%
• 4:00 Eurozone M3 Money Supply. Estimate 4.1%
• 4:00 Eurozone Private Loans. Estimate 2.9%
• 5:00 Italian Preliminary CPI. Estimate 0.2%
• All Day – ECOFIN Meetings
• 8:30 US Core PCE Price Index. Estimate 0.2%
• 8:30 US Personal Spending. Estimate 0.4%
• 8:30 US Personal Income. Estimate 0.4%
• 9:45 US Chicago PMI. Estimate 58.2
• 10:00 US Pending Home Sales. Estimate 0.6%

Tuesday (May 1)

• 10:00 US ISM Manufacturing PMI. Estimate 58.6

*All release times are DST

*Key events are in bold

EUR/USD for Monday, April 30, 2018

EUR/USD for April 30 at 4:25 DST

Open: 1.2130 High: 1.2123 Low: 1.2109 Close: 1.2118

EUR/USD Technical

EUR/USD showed little movement in the Asian session. The pair has inched lower in European trade

• 1.2092 is a weak support line. It could be tested in the Monday session
• 1.2235 is the next resistance line

Further levels in both directions:

• Below: 1.2092, 1.2025, 1.1915 and 1.1809
• Above: 1.2235, 1.2319 and 1.2460
• Current range: 1.2092 to 1.2235

OANDA’s Open Positions Ratio

EUR/USD ratio is showing little movement in the Monday session. Currently, short positions have a slender majority (51%), indicative of a lack of trader bias towards EUR/USD.

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.