EUR/USD – Euro gains ground despite weak German confidence report

EUR/USD is slightly higher in the Tuesday session, erasing the losses seen on Monday. Currently, the pair is trading at 1.1396, up 0.36% on the day. On the release front, both German and Eurozone ZEW Economic Sentiment both improved in December, but still posted sharp declines. In the U.S, the markets are braced for a sharp drop from PPI and Core PPI, with estimates for 0.0% and 0.1%, respectively. On Wednesday, the eurozone releases industrial production and the U.S. publishes CPI reports.

Financial experts remained very concerned over the economic prospects in Germany and the eurozone. The German ZEW Economic Sentiment survey improved to -17.5, beating the estimate of -25.0 points. However, the indicator has been mired in negative territory for a 9th consecutive month. The eurozone reading of -23.2 was also dismal, although it was slightly above the forecast of 21.0 points. The ZEW was bleak in its assessment of the December readings:  The assessment of the economic situation has worsened dramatically for both Germany and the Eurozone. This is indicative of relatively weak economic growth in the fourth quarter. If upcoming Q4 data misses expectations, the euro will be under heavy pressure.

The ECB holds a policy meeting on Thursday, and policymakers are expected to finally wind up the bank’s bond purchase program. The scheme commenced in March 2015 and has grown to some EUR 2.5 trillion in assets. The program was implemented in order to kick-start the economy and raise ultra-low inflation levels. Inflation has moved closer to the ECB target of around 2 percent, and the eurozone economy performed well earlier in the year. This prompted the ECB to announce that it would wind up the program in December. However, economic conditions have deteriorated in recent months, as the nagging U.S.-China trade war has weighed on the global economy and hurt the export and manufacturing sectors in Germany and the eurozone. ECB policymakers are not expected to change course, but any hints of re-introducing stimulus in 2019 would likely send the euro sharply lower.

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EUR/USD Fundamentals

Tuesday (December 11)

  • 1:30 French Final Private Payrolls. Estimate 0.2%. Actual 0.1%
  • 5:00 German ZEW Economic Sentiment. Estimate -25.0. Actual -17.5
  • 5:00 Eurozone ZEW Economic Sentiment. Estimate -23.2. Actual -21.0
  • 5:45 US NFIB Small Business Index. Estimate 107.3. Actual 104.8
  • 8:30 US PPI. Estimate 0.0%
  • 8:30 US Core PPI. Estimate 0.1%

Wednesday (December 12)

  • 5:00 Eurozone Industrial Production. Estimate 0.2%
  • 8:30 US CPI. Estimate 0.0%
  • 8:30 US Core CPI. Estimate 0.2%

*All release times are EST

*Key events are in bold

EUR/USD for Tuesday, December 11, 2018

EUR/USD for December 11 at 6:45 EST

Open: 1.1379 High: 1.1391 Low: 1.1350 Close: 1.1396

EUR/USD Technical

S1 S2 S1 R1 R2 R3
1.1120 1.1212 1.1300 1.1434 1.1553 1.1685

EUR/USD ticked higher in the Asian session and this trend has continued in European trade

  • 1.1300 is providing support
  • 1.1434 is the next 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

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

Market Analyst at OANDA
A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including Investing.com, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.