EUR/USD – Weak Euro Heading to 1.20, European Markets Closed for May Day

EUR/USD continues to lose ground this week. In the Tuesday session, the pair is trading at 1.2037, down 0.36% on the day. On the release front, European markets are closed for May Day, so there are no eurozone or German releases. In the US, today’s key event is ISM Manufacturing PMI, which is expected to drop to 58.4 points. On Tuesday, the eurozone releases Preliminary Flash GDP, and Germany and the eurozone will publish PMI reports. The US will release ADP Nonfarm Employment Change and the Federal Reserve will release a rate statement.

German Retail Sales, the primary gauge of consumer spending, continues to struggle. The indicator dropped 0.6% in April, marking a fourth consecutive decline. At the same time, the German consumer continues to show optimism regarding the economy, as underscored by recent GfK consumer confidence reports. The indicator edged lower to 10.8, just shy of the estimate of 10.9 points. The indicator has hovered close to the 11-point level since July 2017.

The Federal Reserve winds up its monthly policy meeting on Wednesday. The markets are expecting the Fed to maintain the benchmark rate at a range between 1.50% and 1.75%, and analysts will be keeping a close eye on the rate statement – a hawkish statement could propel the US dollar to higher levels. There is growing sentiment that the Federal Reserve will raise interest rates four times this year, although Fed policymakers have not changed their forecast 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.

Shaky Shaky

 EUR/USD Fundamentals

Tuesday (May 1)

  • 10:00 US ISM Manufacturing PMI. Estimate 58.4
  • 10:00 Construction Spending. Estimate 0.5%
  • 10:00 US ISM Manufacturing Prices. Estimate 78.3
  • All Day – US Total Vehicle Sales. Estimate 17.1M

Wednesday (May 2)

  • 3:55 German Final Manufacturing PMI. Estimate 58.1
  • 4:00 Eurozone Final Manufacturing PMI. Estimate 56.0
  • 5:00 Eurozone Preliminary Flash GDP. Estimate 0.4%
  • 8:15 US ADP Nonfarm Employment Change. Estimate 200K
  • 11:30 German Buba President Weidmann Speaks
  • 14:00 US FOMC Statement
  • 14:00 US Federal Funds Rate. Estimate <1.75%

*All release times are DST

*Key events are in bold

EUR/USD for Tuesday, May 1, 2018

EUR/USD for May 1 at 5:25 DST

Open: 1.2080 High: 1.2084 Low: 1.2035 Close: 1.2037

 

EUR/USD Technical

S1 S2 S1 R1 R2 R3
1.1809 1.1915 1.2025 1.2092 1.2235 1.2319

EUR/USD was flat in the Asian session and has posted losses in European trade

  • 1.2025 is under pressure in support. It could be tested in the Tuesday session
  • 1.2092 is the next resistance line

Further levels in both directions:

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

OANDA’s Open Positions Ratio

EUR/USD ratio is almost unchanged in the Tuesday session. Currently, short positions have a slender majority (52%), indicative of slight trader bias towards EUR/USD continuing to move downwards.

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 Investing.com, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.