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EUR/USD – Euro Recovers as German Retail Sales Sparkles

EUR/USD has recorded considerable gains in the Wednesday session. Currently, the pair is trading at 1.1616, up 0.66% on the day. On the release front, German retail sales jumped 2.3%, crushing the estimate of 0.5%. In France, Consumer Spending declined 1.5%, well off the estimate of 0.2%. Preliminary GDP dropped to 0.2%, shy of the estimate of 0.3%. Later in the day, Germany releases Preliminary CPI, which is expected to rise to 0.3%. In the US, the key event is Preliminary GDP, with an estimate of 2.3%. We’ll also get a look at employment numbers, with ADP nonfarm payrolls expected to drop to 191 thousand.

German retail sales were unexpectedly strong in April, with a sharp gain of 2.3%. This reading ended a nasty streak of four declines. The gain is the strongest since December, and raises hopes that second quarter growth will rebound after a sluggish first quarter. Inflation is also expected to improve, with German Preliminary CPI forecast to rise to 0.3% in May after a flat reading of 0.0% in April. The story in France, the second largest economy in the eurozone, was not as bright. Consumer spending plunged 1.5% in April, marking a 3-month low. Preliminary GDP fell to 0.2% in March, down from 0.6% a month earlier.

On Tuesday, the euro dropped to its lowest level since July 2017, in response to the political turmoil in Italy. The trouble began when President Sergio Mattarella vetoed a ministerial choice of the two parties which were expected to form a coalition, the League Nord and the Five Star Movement. The prime minister-elect, Giuseppe Conte, then announced that he had withdrawn his mandate to form a government, and Mattarella invited Carlo Cottarelli, a former IMF economist, to form a temporary technocrat government. However, there are reports that the League and Five Start Movement could get another kick at the can to form a government. Another possibility is that Italy will hold a snap election. It’s doubtful if another election would change the political landscape, so Matterella will likely huddle with political leaders and make a supreme effort to avoid another general election.

  Bank of Canada Next [1]

  Safety is the priority [2]

EUR/USD Fundamentals

Wednesday (May 30)

Thursday (May 31)

*All release times are DST

*Key events are in bold

EUR/USD for Wednesday, May 30, 2018

EUR/USD for May 30 at 6:50 DST

Open: 1.1540 High: 1.1618 Low: 1.1519 Close: 1.1616

EUR/USD Technical

S1 S2 S1 R1 R2 R3
1.1212 1.1312 1.1448 1.1613 1.1718 1.1809

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

Further levels in both directions:

OANDA’s Open Positions Ratio

EUR/USD ratio is unchanged this week. Currently, long positions have a majority (57%), indicative of trader bias towards EUR/USD continuing to move to higher 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 [6]

Market Analyst at OANDA [7]
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.
Kenny Fisher

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