EUR/USD – Euro rally takes pause, Investors eye U.S. GDP and durable goods orders

EUR/USD has posted slight losses in the Friday session. Currently, the pair is trading at 1.1422, down 0.20% on the day. On the release front, German GfK Consumer Confidence remained pegged at 10.4, edging above the estimate of 10.3 points. It’s a busy day in the U.S., highlighted by Final GDP for the third quarter, with an estimate of a strong 3.5% gain. Durable good orders is expected to rebound with a gain of 1.6%. As well, the Core PCE Price Index, which is the Federal Reserve’s preferred gauge of inflation, is forecast to edge up to 0.2%.

The euro has climbed over 1.0% this week, and EUR/USD pushed close to the 1.15 line on Thursday. The dollar was broadly lower on Thursday, as investors reacted coolly to the Fed’s rate statement. The statement was less dovish than the markets wanted, as policymakers continued to stick with their policy of gradual increases. The Fed downscaled its forecast for rate hikes in 2019. from three hikes to two. Just a few months ago, the markets were predicting a “rate hike every quarter” for 2019, but the Fed has made a U-turn in monetary policy, as policymakers respond to economic data which is pointing to slower economic growth.

Aside from disappointment over the Fed statement, the euro also was boosted from an important development on the domestic front. Italy’s populist government has been on a collision course with the EU over its budget, which provides for hefty spending. The EU had argued that the budget breaches its financial rules and had threatened financial sanctions against Rome. However, the deadlock appears over, as the parties announced on Wednesday that Italy had agreed to lower its deficit target to 2.04%, down from its original target of 2.4%.

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Friday (December 21)

• 2:00 German GfK Consumer Climate. Estimate 10.3. Actual 10.4
• 2:00 German Import Prices. Estimate -1.0%
• 2:45 French Consumer Spending. Estimate 0.0%. Actual -0.3%
• 8:30 US Core Durable Goods Orders. Estimate 0.3%
• 8:30 US Final GDP. Estimate 3.5%
• 8:30 Durable Goods Orders. Estimate 1.6%
• 8:30 US Final GDP Price Index. Estimate 1.7%
• 10:00 Eurozone Consumer Confidence -4
• 10:00 US Core PCE Price Index. Estimate 0.2%
• 10:00 US Personal Spending. Estimate 0.3%
• 10:00 US Revised UoM Consumer Sentiment. Estimate 97.6
• 10:00 US Personal Income. Estimate 0.3%
• 10:00 US Revised UoM Inflation Expectations

*All release times are EST

*Key events are in bold

EUR/USD for Friday, December 21, 2018

EUR/USD for December 21 at 6:15 EST

Open: 1.1445 High: 1.1474 Low: 1.1412 Close: 1.1422

EUR/USD Technical

EUR/USD ticked lower in the Asian session. The pair edged higher in European trade but has reversed directions and is down considerably

• 1.1300 is providing support
• 1.1434 has switched to resistance as USD/CAD has posted losses on Friday
• Current range: 1.1300 to 1.1434

Further levels in both directions:

• Below: 1.1300, 1.1212 and 1.1120
• Above: 1.1434, 1.1553, 1.1685 and 1.1803

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