EUR/USD – Euro shrugs as German business climate falls

EUR/USD has steadied in the Friday session, after posting considerable losses on Thursday. Currently, the pair is trading at 1.1317, down 0.23% on the day. On the release front, it’s a quiet end to the week. The sole eurozone events, German Ifo Business Climate, fell for a fifth successive month, dropping to 99.1 points. There are no U.S events on the schedule.

There were no surprises from the ECB on Thursday, as the central bank maintained policy as well as guidance for “rates to remain at their present levels at least through the summer of 2019”. With the ECB finally winding up its massive stimulus scheme, market focus has shifted to the timing of a rate hike. However, with the eurozone economy showing signs of weakness, we’re unlikely to see a rate hike before the fourth quarter, at the earliest. The ECB remains cautious, and said that risks “have moved to the downside”. This dovish stance indicates that the euro will not be receiving any support from the bank, and will have to rely on stronger data in order to attract investors.

The eurozone manufacturing sector continues to show worrying signs of a slowdown. Eurozone manufacturing PMI fell to 50.5, just above the 50-point threshold which separates contraction from expansion. This marked a six successive drop in the score. Germany fared even worse, as manufacturing PMI slipped to 49.7, pointing to contraction. It was the lowest reading since June 2013. The weak reading underscore the toll that the global trade war has taken on the eurozone and German economies, with less demand for exports weighing on manufacturing production.

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EUR/USD Fundamentals

Friday (January 25)

  • 4:00 German Ifo Business Climate. Estimate 100.7. Actual 99.1

*All release times are EST

*Key events are in bold

EUR/USD for Friday, January 25, 2019

EUR/USD for January 25 at 5:25 EST

Open: 1.1306 High: 1.1335 Low: 1.1300 Close: 1.1317

EUR/USD Technical

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

EUR/USD has posted small gains in the Asian and European sessions

  • 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 and 1.1120
  • Above: 1.1434, 1.1553, 1.1685 and 1.1803

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.