EUR/USD – Euro Dips Under 1.19 Despite Solid German Numbers

EUR/USD has posted losses in the Tuesday session. Currently, the pair is trading at 1.1884, down 0.33% on the day. On the release front, Germany posted strong numbers, as Industrial Production and Trade Balance both beat their estimates. The US will release JOLTS Jobs Openings and Federal Reserve Chair Jerome Powell will speak at an event in Zurich. Later in the day, US President Trump will announce whether the US will leave the nuclear agreement with Iran. On Wednesday, the US releases PPI reports.

The ECB cut its stimulus package at the start of the year from EUR 60 billion to 30 billion, while at the same time it extended the program to September. However, soft eurozone numbers, especially in Germany, have raised concerns that the bank may decide to again extend stimulus into 2019. German Factory Orders posted a second decline in the past three months, and the most recent PMIs in the services and manufacturing sectors also headed lower. On Tuesday, German numbers were solid, but this didn’t prevent the euro from dropping lower. Industrial Production climbed 1.0%, beating the estimate of 0.8% and ending a nasty streak of three straight declines. As well, Germany posted a trade surplus of EUR 22.0 billion, easily beating the estimate of EUR 19.9 billion. This marked a 4-month high.

The Federal Reserve’s newest regional Fed president, Thomas Barkin, delivered a major speech on Monday, and his tone was decidedly upbeat. Barkin said that the economy is “remarkably strong: above trend growth, low unemployment, inflation at target”. Barkin added that although the labor market is strong, it is not causing pressure on wages, but low unemployment should lead to an increase in inflationary pressures. As for upcoming rate increases, Barkin was careful to remain mum on how many rate hikes he expects this year. The Fed raised rates in March by a quarter-point and continues to forecast two additional increases this year. However, some policymakers are calling for three more hikes, given the strong health of the US economy.

Italian Politics Weighs on the Euro

Markets Caught Between Opposing Forces

 

EUR/USD Fundamentals

Tuesday (May 8)

  • 2:00 German Industrial Production. Estimate 0.8%. Actual 1.0%
  • 2:00 German Trade Balance. Estimate 19.9B. Actual 22.0B
  • 3:15 Federal Reserve Chair Jerome Powell Speaks
  • 6:00 US NFIB Small Business Index. Estimate 105.2
  • 10:00 US JOLTS Job Openings. Estimate 6.02M
  • Tentative – US IBD/TIPP Economic Optimism. Estimate 51.3
  • 14:00 US President Trump Speaks

Wednesday (May 9)

  • 2:45 French Industrial Production. Estimate 0.1%
  • 8:30 US PPI. Estimate 0.2%
  • 8:30 US Core PPI. Estimate 0.2%

*All release times are DST

*Key events are in bold

 

EUR/USD for Tuesday, May 8, 2018

EUR/USD for May 8 at 6:00 DST

Open: 1.1923 High: 1.1939 Low: 1.1883 Close: 1.1884

EUR/USD Technical

S1 S2 S1 R1 R2 R3
1.1613 1.1718 1.1809 1.1915 1.2025 1.2092

EUR/USD ticked lower in the Asian session and has edged downwards in European trade

  • 1.1809 is providing support
  • 1.1915 has switched to a resistance role after losses by EUR/USD on Tuesday. It is a weak line

Further levels in both directions:

  • Below: 1.1809, 1.1718 and 1.1613
  • Above: 1.1915, 1.2025, 1.2092 and 1.2235
  • Current range: 1.1809 to 1.1905

OANDA’s Open Positions Ratio

EUR/USD ratio is almost unchanged in the Monday session. Currently, long positions have a small 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.

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.