EUR/USD – Euro heads downward, investors eye US consumer confidence

EUR/USD has posted losses in the Friday session. Currently, the pair is trading at 1.1615, down 0.48% on the day. In economic news, German Wholesale Price Index dipped to 0.5% in June, down from 0.8% a month earlier. Still, this beat the estimate of 0.4%. In the U.S, the key indicator is UoM Consumer Sentiment, which is expected to dip to 98.1 points.

At the ECB June policy meeting, Mario Draghi spelled out his plans to wind up the Bank’s asset-purchase program (QE). Draghi said that the ECB would taper the purchases from EUR 30 billion to 15 billion in September, and terminate the program completely in December. True to form, Draghi left open the possibility of extending QE if needed. Still, with the eurozone economy generally performing well and inflation up to 1.7%, the markets are optimistic that the ECB will wind up QE on schedule. That means that attention is focusing on the timing of a rate hike. At the June meeting, the ECB said it would keep hold rates at current levels “through the summer” of 2019, but this wording is vague, leaving the precise timing open to debate. Does this phrase mean that that the ECB will wait until the October meeting, or could the ECB raise rates during the summer, if conditions warrant a hike? ECB policymakers will be carefully monitoring growth and inflation data in the eurozone, with strong numbers reinforcing the case to raise interest rates sooner rather than later.

Jerome Powell spoke in a radio interview on Thursday, and gave the U.S economy a solid report card. Powell said that the economy is “in a really good place”, pointing to President Trump’s massive tax cut scheme and increased spending as key factors in boosting economic growth. Powell did not address monetary policy and said he was uncertain as to the effects of the current trade disputes which has embroiled the U.S and its trading partners. The Fed will likely press the rate trigger in the second half of the year, but it is an open question as to whether we’ll see one hike over the next six months. The Fed is projecting growth of 2.8% in 2018, compared to 2.3% in 2017. Powell will be in the spotlight next week when he appears for his semi-annual testimony before Congress.

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EUR/USD Fundamentals

Friday (July 13)

• 2:00 German WPI. Estimate 0.4%. Actual 0.5%
• All Day – ECOFIN Meetings
• 8:30 US Import Prices. Estimate 0.1%
• 10:00 US Preliminary UoM Consumer Sentiment. Estimate 98.1
• 10:00 US Preliminary UoM Inflation Expectations
• 11:00 US Fed Monetary Policy Report

*All release times are DST

*Key events are in bold

EUR/USD for Friday, July 13, 2018

EUR/USD for July 13 at 4:35 DST

Open: 1.1672 High: 1.1675 Low: 1.1627 Close: 1.1615

EUR/USD Technical

EUR/USD inched lower in the Asian session and has posted further losses in European trade

• 1.1553 is providing support
• 1.1637 is the next resistance line

Further levels in both directions:

• Below: 1.1553, 1.1434 and 1.1312
• Above: 1.1637, 1.1728, 1.1829 and 1.1910
• Current range: 1.1553 to 1.1637

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