EUR/USD – Euro slightly higher, investors await German CPI

EUR/USD has started the week with slight gains. In the Monday session, the pair is trading at 1.1686, up 0.25% on the day. On the release front, today’s key event is German Preliminary CPI, which is expected to climb to 0.4%. In the U.S, Pending Home Sales is forecast to rebound with a gain of 0.4%, after two straight declines. Tuesday will be busier on both sides of the pond. Germany releases retail sales and the eurozone publishes CPI and GDP reports. The U.S will publish consumer spending and inflation indicators, as well as CB Consumer Confidence.

U.S numbers were sharp on Friday, but the dollar couldn’t gain ground against the euro. Advance GDP, the first of three GDP reports in the second quarter, posted a strong gain of 4.1%, just shy of the forecast of 4.2%. This was much stronger than the gain of 2.2% in Q1 and marked the strongest quarter of economic growth since 2014. As well, UoM Consumer Sentiment dipped lower to 97.9 but still beat the estimate of 97.1 points. President Trump took credit for the strong GDP report and claimed that “these numbers are very, very sustainable”. However, analysts are being more cautious in their forecasts, calling for growth in the third quarter of around 2.5 percent.

There were no surprises from the ECB, which made no changes to monetary policy at its Thursday meeting. The main refinancing rate remains at 0.0%, where it has sat since January 2016. In a policy statement, policymakers reiterated that rates would remain at current levels “through the summer of 2019”, and “as long as necessary to boost inflation to the target of just under 2.0%. There has been some discussion as to the exact meaning of “through the summer”, but what is clear is that the ECB plans to keep rates at a flat 0.00% after winding up its bond-purchase scheme at the end of the year. This weighed negatively on the euro, which dropped 0.07% on Thursday. The exact timing of a rate hike will depend on the strength of the eurozone economy and inflation levels – if the second half of 2018 is marked by stronger growth and higher inflation, there will be pressure on the ECB to raise rates earlier rather than later in 2019.

  Dollar marks time in Asia as traders consider a busy data week

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EUR/USD Fundamentals

Monday (July 30)

• All Day – German Preliminary CPI. Estimate 0.4%
• 3:00 Spanish Flash CPI. Estimate 2.3%. Actual 2.2%
• Tentative – Italian 10-year Bond Auction
• 10:00 US Pending Home Sales. Estimate 0.4%
• Tentative – US Loan Officer Survey

Tuesday (July 31)

• 2:00 German Retail Sales. Estimate 1.1%
• 2:45 French Preliminary CPI. Estimate -0.3%
• 3:55 German Unemployment Change. Estimate -10K
• 5:00 Eurozone CPI Flash Estimate. Estimate 2.0%
• 5:00 Eurozone Core CPI Flash Estimate. Estimate 1.0%
• 5:00 Eurozone Preliminary Flash GDP. Estimate 0.4%
• 5:00 Eurozone Unemployment Rate. Estimate 8.3%
• 8:30 US Core PCE Price Index. Estimate 0.1%
• 8:30 US Personal Spending. Estimate 0.4%
• 10:00 US CB Consumer Confidence. Estimate 126.5

*All release times are DST

*Key events are in bold

EUR/USD for Monday, July 30, 2018

EUR/USD for July 30 at 6:20 DST

Open: 1.1657 High: 1.1691 Low: 1.1648 Close: 1.1686

EUR/USD Technical

EUR/USD was flat in the Asian session and has edged higher in European trade

• 1.1637 is providing support
• 1.1728 is the next line of resistance

Further levels in both directions:

• Below: 1.1637, 1.1553, 1.1434 and 1.1312
• Above: 1.1728, 1829 and 1.1910
• Current range: 1.1637 to 1.1728

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