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EUR/USD – Euro Calm as German, Euro Services PMIs Within Expectations

EUR/USD is unchanged in the Tuesday session. Currently, the pair is trading at 1.1697, down 0.01% on the day. On the release front, the focus is on the service sector. Eurozone and German Final Services both dropped in May, but met expectations. Eurozone retail sales remained unchanged at 0.1%, but this missed the forecast of 0.5%. In the US, the ISM Non-Manufacturing PMI is expected to rise to 57.9 points. We’ll also get a look at JOLTS Job Openings, which is expected to drop to 6.49 million.

The euro remains calm this week, as Italy appears to have wrapped up months of political turmoil, as the country finally has a government. The new coalition is made up of two euro-sceptic parties, the League and the Five-Start Movement, which is likely to result in friction between Rome and the European Union. After President Sergio Matterella vetoed the choice for finance minister last week, it appeared that the country might be headed for another election and more political uncertainty, and Italian stocks and bonds dropped sharply. However, the crisis is over after the prime minister-elect, Giuseppe Conte, found another candidate for the key finance post. The new government has said it will drastically reduce immigration and raise spending, planks which could put it at odds with EU policy. Although the League and Five Star Movement have not issued any threats to withdraw from the EU or even hold a referendum on EU membership, there is plenty of concern among investors that the fourth largest economy in the eurozone is being steered by a government with a populist, anti-establishment platform.

Is a new global trade war brewing? There are some ominous signs that the US and some major trading partners are headed in that direction, after the Trump administration slapped tariffs on the European Union, Mexico and Canada on Thursday. The U.S had granted all three trading partners a temporary extension but cited insufficient progress on trade talks as the reason for the tariffs.  This has triggered promises of retaliatory tariffs on US products, and tempers were short at the G-7 meeting of finance ministers in Canada on the weekend. U.S Treasury Secretary Steve Mnuchin faced sharp criticism from other finance ministers over the tariffs. The leaders of the G-7 meet in Canada on June 8, and European leaders want to take trade and try to find some compromise with the U.S in order to remove the tariffs.

  Investors utterly unfazed by trade tariffs [1]

EUR/USD Fundamentals

Tuesday (June 5)

*All release times are DST

*Key events are in bold

EUR/USD for Tuesday, June 5, 2018

EUR/USD for June 6 at 6:25 DST

Open: 1.1699 High: 1.1717 Low: 1.1683 Close: 1.1697

EUR/USD Technical

S1 S2 S1 R1 R2 R3
1.1312 1.1418 1.1613 1.1718 1.1809 1.1915

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

Further levels in both directions:

OANDA’s Open Positions Ratio

EUR/USD ratio is showing gains in long positions. Currently, long positions have a majority (59%), indicative of trader bias towards EUR/USD breaking out and climbing 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 [5]

Market Analyst at OANDA [6]
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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