EUR/USD is showing little movement this week. In the Tuesday session, the pair is trading at 1.1814, up 0.19% on the day. On the release front, there are no major German or eurozone indicators. In the US, the sole indicator is the Richmond Manufacturing Index. On Wednesday, Germany and eurozone will release manufacturing and services PMI reports. In the US, the Federal Reserve will release the minutes of its May policy meeting.
As Italy moves towards establishing a new government, the EU is watching nervously. Two euro-sceptic parties, the Lega Nord and the Five Star Movement have reached an agreement and requested approval to form a government from the country’s president. The platform issued by the parties calls for increased deficit spending and a review of European Union fiscal rules. So far, neither party has called for a referendum on Italian membership in the European Union or demanded that the EU cancel the portion of Italy’s debt that it holds. Still, Italy is the third largest economy in the EU (with Britain heading out the door), and any moves which will put Italy on a collision course with the EU could have a negative impact on investor sentiment towards the euro. On Monday, ECB governing council member Ewald Nowotny admitted that the political situation in Italy had “created a lot of nervousness”, but that the new government would be judged on its actions.
There was a dramatic development in the China-US tariff battle on the weekend, as US Treasury Secretary Steven Mnuchin said that the trade war was being ‘put on hold’. Just last week, the White House sounded pessimistic about a deal being reached with China. The two economic giants have traded stiff tit-for-tat tariffs in recent weeks, worth billions in trade. These moves had raised fears of a bilateral trade war between the two largest economies in the world. The respite in tariffs means that the US can now discuss the US trade deficit with China, which President Trump has long complained is a result of a non-level playing field with China. In addition to the trade deficit, the US wants to discuss technology transfers and cyber theft.
Tuesday (May 22)
- Tentative – German Buba Monthly Report
- 10:00 US Richmond Manufacturing Index. Estimate 9
Wednesday (May 23)
- 3:30 German Flash Manufacturing PMI. Estimate 57.9
- 3:30 German Flash Services PMI. Estimate 53.1
- 4:00 Eurozone Flash Manufacturing PMI. Estimate 56.1
- 4:00 Eurozone Flash Services PMI. Estimate 54.7
- 10:00 Eurozone Consumer Confidence. Estimate 0
- 14:00 US FOMC Meeting Minutes
*All release times are DST
*Key events are in bold
EUR/USD for Tuesday, May 22, 2018
EUR/USD for May 22 at 5:10 DST
Open: 1.1791 High: 1.1830 Low: 1.1757 Close: 1.1815
EUR/USD edged lower in the Asian session but has reversed directions and posted gains in European trade
- 1.1809 was tested earlier in support and is a weak line
- 1.1915 is the next resistance line
Further levels in both directions:
- Below: 1.1809, 1.1718, 1.1613 and 1.1448
- Above: 1.1915, 1.2025 and 1.2092
- Current range: 1.1809 to 1.1915
OANDA’s Open Positions Ratio
EUR/USD ratio is showing gains towards long positions. Currently, long positions have a majority (54%), indicative of trader bias towards EUR/USD continuing to move higher.
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.