EUR/USD – Euro rally continues on strong inflation report

EUR/USD has posted gains in the Tuesday session, continuing the upward movement which started the week. Currently, the pair is trading at 1.1408, up 0.47% on the day. On the release front, Eurozone PPI climbed to 0.8%, above the estimate of 0.5%. There are no major releases out of the U.S. On Wednesday, ECB President Mario Draghi will speak at a banking conference in Frankfurt. Germany and the eurozone will release Services PMIs and we’ll also get a look at eurozone retail sales.

The U.S dollar continues to retreat this week, as EUR/USD has climbed 0.80%. The greenback remains under pressure following the G-20 summit on the weekend, where President Trump and Chinese President Xi Jinping held a meeting and agreed to suspend any further tariff moves until March 1. Trump had threatened to raise tariffs on all Chinese products from 10 percent to 25 percent, and news of a ‘cease fire’ between the world’s two largest economies was met with relief by the markets. With a marked increase in risk appetite, the dollar is broadly lower. At the same time, the reprieve is only for 90 days, and market optimism could quickly fade unless the sides make substantial progress in the next several weeks.

German indicators continue to struggle in the fourth quarter, raising concerns among analysts. Last week, GfK Consumer Climate dipped to an 18-month low and retail sales fell by 0.3%, its first decline since July. Consumers are holding tighter to the purse strings, which is hurting economic growth. The downward trend continued on Monday, as Manufacturing PMI dropped to 51.8 in November, down from 52.2 points in October. This marked a fourth straight downturn and was the lowest reading since April 2016. The global trade war has taken a bite out of German exports and a slowdown in the eurozone economy has dampened manufacturing growth in Germany. This does not bode well for the eurozone economy, as the German economy is often a bellwether for the rest of the eurozone.

Post G-20 binary trading events pretty much as scripted

Commodities Weekly: Commodities rise after G-20 meeting

EUR/USD Fundamentals

Tuesday (December 4)

• 2:35 French Government Budget Balance. Actual -87.0B
• 3:00 Spanish Employment Change. Estimate 34.2K. Actual -1.8K
• 5:00 Eurozone PPI. Estimate 0.5%. Actual 0.8%
• All Day – ECOFIN Meetings
• 10:00 US FOMC Member Williams Speaks
• Tentative – IBD/TIPP Economic Optimism. Estimate 57.3

Wednesday (December 5)

• 3:30 ECB President Draghi Speaks
• 3:55 German Final Services PMI. Estimate 53.5
• 4:00 Eurozone Final Services PMI. Estimate 53.1
• 5:00 Eurozone Retail Sales. Estimate 0.2%

*All release times are EST

*Key events are in bold

EUR/USD for Tuesday, December 4, 2018

EUR/USD for December 4 at 6:00 EST

Open: 1.1354 High: 1.1419 Low: 1.1350 Close: 1.1408

EUR/USD Technical

EUR/USD posted gains in the Asian session and this trend continues in European trade

• 1.1300 is providing support
• 1.1434 is a weak resistance line
• Current range: 1.1300 to 1.1434

Further levels in both directions:

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

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