EUR/USD – Euro Dips on Soft German Data

EUR/USD has posted gains in the Friday session. Currently, the pair is trading at 1.1766, down 0.28% on the day. On the release front, German numbers were a disappointment. German Industrial Production declined 1.0%, well off the estimate of 0.4%. Germany’s trade surplus narrowed to EUR 19.4 billion, short of the estimate of EUR 20.3 billion. French Industrial Production also declined, with a reading of -0.5%. This missed the estimate of 0.4%. There are no major U.S events on the schedule. Later in the day, leaders of the Group of 7 will gather for a two-day meeting in Quebec City.

Is the German manufacturing sector in trouble? After a sluggish first quarter, analysts were hoping for a rebound in manufacturing data in the second quarter. However, this week’s manufacturing indicators are pointing to a downturn in April. Factory orders declined 2.5%, its worst showing in three months. On Friday, Industrial Production fell 1.0%, marking the fourth decline in five months. As the locomotive of the eurozone, German indicators can have a strong impact on the euro exchange rate – if German numbers continue to miss expectations, investors could give the euro a thumbs down and send it lower.

The upcoming G-7 meeting in Quebec is being closely monitored, as the summit comes at a time of escalating trade tensions between the U.S and some of its major trading partners. Last week, finance ministers from six members of the G-7 were united in their criticism of US Treasury Secretary Steve Mnuchin over the brewing trade war. The trouble started last week, when the Trump administration slapped stiff tariffs on Canada, Mexico and the European Union. This resulted in promises of retaliation, and Canada and Mexico have already announced duties on U.S products. Will we see a higher profile, repeat performance at this meeting? The escalating trade battle is sure to dominate the summit, where Trump can expect to hear strong complaints from other leaders over the tariffs, which Trump justified on the grounds of ‘national security’. If the leaders fail to resolve matters, the result could be a nasty trade war between the U.S and its major trading partners.

Dollar in demand ahead of G6+1

Let the Games Begin

 

EUR/USD Fundamentals

Friday (June 8)

  • 2:00 German Industrial Production. Estimate 0.4%. Estimate -1.0%
  • 2:00 German Trade Balance. Estimate 20.3B. Actual 19.4B
  • 2:45 French Industrial Production. Estimate 0.4%. Estimate -0.5%
  • Day 1 – G7 Meetings
  • 10:00 US Final Wholesale Inventories. Estimate 0.9%

*All release times are DST

*Key events are in bold

EUR/USD for Friday, June 8, 2018

EUR/USD for June 8 at 5:50 DST

Open: 1.1774 High: 1.1838 Low: 1.1773 Close: 1.1766

EUR/USD Technical

S1 S2 S1 R1 R2 R3
1.1448 1.1613 1.1718 1.1809 1.1915 1.1996

EUR/USD has posted small gains in the Asian and European sessions

  • 1.1718 is providing support
  • 1.1809 was tested earlier in resistance

Further levels in both directions:

  • Below: 1.1718, 1.1613 and 1.1448
  • Above: 1.1809, 1.1915, 1.1996 and 1.2154
  • Current range: 1.1718 to 1.1809

OANDA’s Open Positions Ratio

EUR/USD ratio is showing movement towards short positions. Currently, long positions have a majority (52%), indicative of slight trader bias towards EUR/USD reversing directions and moving 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

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.