EUR/USD – Euro flat as Germany, eurozone GDP reports match forecasts

EUR/USD started the week with slight losses, but has steadied on Wednesday. Currently, the pair is trading at 1.1203, up 0.01% on the day. On the release front, first-quarter GDP reports for Germany and the eurozone matched their forecasts. The U.S. will release consumer spending reports for July, with the markets braced for weaker numbers. Retail sales is projected slow to 0.2%, down from 1.6% in the previous release. Core retail sales is projected to drop to 0.7%, compared to 1.2% in March. On Thursday, the eurozone releases trade balance, while the U.S. posts building permits, unemployment claims and the Philly Fed Manufacturing Index.

There was positive news from first-quarter GDP data in the eurozone.German Preliminary GDP improved to 0.4% in the first quarter, after a flat zero reading in Q4 of 2018. In the eurozone, Flash GDP also climbed to 0.4% in the first quarter, up from 0.2% in Q4. Is the economic slowdown over in the eurozone? It’s too early to tell, but if key indicators follow suit and head upwards, sentiment towards the eurozone will improve and likely boost the euro.

On Tuesday, ZEW economic sentiment surveys for Germany and the eurozone missed the mark, as both posted declines. The German release ended a long streak of declines in April, with a gain of 3.1. The indicator slipped to 2.1 in May, pointing to pessimism. Eurozone ZEW economic sentiment posted a decline of 1.6 in May, after a score of 4.5 in April. The ZEW surveys indicate that institutional investors and analysts are pessimistic about the economic outlooks for the eurozone and Germany. The manufacturing sectors have been particularly weakened, as the trade war between China and the U.S. has escalated with another round of tariffs between the sides. The U.S. has raised tariffs on $200 billion in Chinese goods, and the next step could mean tariffs on European vehicles which are produced in China. This could spell trouble for the massive European auto industry, as the tariffs would raise the prices of German and French vehicles.

Markets stabilise overnight

European open – Trump downplays trade dispute

EUR/USD Fundamentals

Wednesday (May 15)

• 2:00 German Preliminary GDP. Estimate 0.4%. Actual 0.4%
  
• 2:45 French Final CPI. Estimate 0.2%. Estimate 0.2%. Actual 0.3%
• 5:00 Eurozone Flash GDP. Estimate 0.4%. Actual 0.4%
  
• 5:00 Eurozone Flash Employment Change. Estimate 0.2%. Actual 0.3%
• Tentative – German 30-year Bond Auction
• 8:30 US Core Retail Sales. Estimate 0.7%
• 8:30 US Retail Sales. Estimate 0.2%
• 8:30 US Empire State Manufacturing Index. Estimate 8.2
• 9:15 US Capacity Utilization Rate. Estimate 78.7%
• 9:15 US Industrial Production. Estimate 0.0%
• 9:30 US FOMC Member Quarles Speaks
• 10:00 US Business Inventories. Estimate 0.0%
• 10:00 US NAHB Housing Market Index. Estimate 64
• 10:30 US Crude Oil Inventories. Estimate 0.0M
• 16:00 US TIC Long-Term Purchases. Estimate 36.3B

Thursday (May 16)

• 5:00 Eurozone Trade Balance. Estimate 19.0B
• 8:30 US Building Permits. Estimate 1.29M
• 8:30 US Unemployment Claims. Estimate 220K
• 8:30 US Philly Fed Manufacturing Index. Estimate 10.0
• 8:30 US Housing Starts. Estimate 1.21M

*All release times are DST

*Key events are in bold

EUR/USD for Wednesday, May 15, 2019

EUR/USD for May 15 at 6:15 DST

Open: 1.1204 High: 1.1217 Low: 1.1198 Close: 1.1203

EUR/USD Technical

EUR/USD posted slight gains in the Asian session and is showing limited movement in European trade

• 1.1120 is providing support
• 1.1212 is fluid. Currently, it is a weak resistance line
• Current range: 1.1120 to 1.1212

Further levels in both directions:

• Below: 1.1120, 1.1046 and 1.0950
• Above: 1.1212, 1.1300, 1.1434 and 1.1553

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