EUR/USD – Euro pauses from sharp slide as German CPI matches forecast

After three straight losing sessions, EUR/USD has reversed directions and posted slight gains. In the Tuesday session, the pair is trading at 1.1249, up 0.28% on the day. On the release front, German ZEW Economic Sentiment posted a dismal reading of -24.1, just above the estimate of -24.2 points. Eurozone ZEW Economic Sentiment fell to -22.0, much weaker than the estimate of -17.3 points. There are no major U.S. events for a second straight day. On Wednesday, there are key indicators on both sides of the pond. Germany and the eurozone will release GDP, while the U.S. releases CPI reports.

The deadlock between Italy and the EU over Italy’s budget continues to weigh on the markets. The EU Commission has set midnight Tuesday as a deadline for Italy to revise its budget by Tuesday, which it argues raises Italy’s debt and is in breach of EU fiscal rules. However, Italian officials have flatly rejected the EU demands. Matteo Salvini, Italy’s interior minister, stated that the government would not change the budget by “one iota”. The EU could respond with stiff fines, worth billions of euros. There is serious concern in Brussels about that overspending by the Italian government could hurt Italian stocks and bonds, destabilize the banking sector and even lead to contagion in other eurozone members. With Rome and Brussels on a collision course, the fallout could weigh on European stock markets and the euro.

The Fed shows no signs of easing up on interest rate hikes, with Fed policymakers stating that interest rates will continue to rise until the “neutral rate” of between 2.5 percent and 3.5 percent is reached. This means we can expect rate hikes once a quarter in 2019, barring a sharp downturn in the economy. The policy of gradual increases is good news for the U.S dollar, and conversely is bearish for the euro, as higher interest rates means that the greenback is more attractive to investors.

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EUR/USD Fundamentals

Tuesday (November 13)

  • 2:00 German Final CPI. Estimate 0.2%. Actual 0.2%
  • 2:45 French Preliminary Private Payrolls. Estimate 0.3%. Actual 0.2%
  • 5:00 German ZEW Economic Sentiment. Estimate -24.2. Actual -24.1
  • 5:00 Eurozone ZEW Economic Sentiment. Estimate -17.3. Actual -22.0
  • 5:14 US NFIB Small Business Index. Estimate 108.0. Actual 107.4
  • 10:00 US FOMC Member Brainard Speaks
  • 14:00 US Federal Budget Balance. Estimate -116.6B
  • Tentative – US Loan Officer Survey

Wednesday (November 14)

  • 2:00 German Preliminary GDP. Estimate -0.3%
  • 2:45 French Final CPI. Estimate 0.1%
  • 5:00 Eurozone Flash GDP. Estimate 0.2%
  • 5:00 Eurozone Industrial Production. Estimate -0.4%
  • Tentative – German 30-year Bond Auction
  • 8:30 US CPI. Estimate 0.3%
  • 8:30 US Core CPI. Estimate 0.2%
  • 18:00 US Fed Chair Powell Speaks

*All release times are DST

*Key events are in bold

EUR/USD for Tuesday, November 13, 2018

EUR/USD for November 13 at 7:15 EST

Open: 1.1217 High: 1.1257 Low: 1.1217 Close: 1.1249

EUR/USD Technical

S1 S2 S1 R1 R2 R3
1.0992 1.1120 1.1212 1.1300 1.1434 1.1553

In the Asian session, EUR/USD ticked lower but has recovered. The pair has shown limited movement in European trade

  • 1.1212 is providing support
  • 1.1300 is the next resistance line
  • Current range: 1.1212 to 1.1300

Further levels in both directions:

  • Below: 1.1212, 1.1120 and 1.0992
  • Above: 1.1300, 1.1434, 1.1553 and 1.1685

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.