EUR/USD – Euro steady ahead of German CPI, Fed minutes

EUR/USD has ticked lower in the Thursday session, after posting considerable gains on Wednesday. Currently, the pair is trading at 1.1354, down 0.11% on the day. On the release front, German Preliminary CPI is expected to post a gain of 0.2%, unchanged from the previous release. German unemployment change came in at -16 thousand, better than the forecast of -10 thousand. It’s a busy day for U.S. indicators. Core PCE Price Index and Personal Spending are expected to post gains of 0.2% and 0.4%, respectively. Unemployment claims are forecast to drop to 221 thousand and the Federal Reserve releases the minutes of its November policy meeting. On Friday, the eurozone releases CPI Flash Estimate and the U.S. publishes Chicago PMI. As well, the G-20 begins a 2-day summit in Argentina.

The U.S. dollar was broadly lower on Wednesday, courtesy of surprisingly dovish remarks from Fed Chair Jerome Powell. The Fed chair said that the current rate levels of 2-2.5 percent is “just below” the neutral range. This is in sharp contrast to Powell’s remarks just last month, when he said that rates were “a long way from neutral”. The backtrack is likely due to the change in economic conditions in recent weeks – GDP has been slowing, the stock markets are down and oil prices have fallen. The Fed may have decided that this required an easing up on rate hikes in 2019, and Powell delivered this message to the markets. Only a few months ago, there was talk of ‘a rate hike each quarter’ in 2019, but now, some analysts are predicting only one or two hikes next year. Despite Powell’s dovish remarks, the odds of a December rate have not diminished, which stand at 79%, according to the CME Group.

German confidence indicators slowed in November, and that could be bad news for the German and eurozone economies. GfK consumer climate dropped to 10.4 points, its weakest level since May 2017. Earlier in the week,  Ifo Business Climate dropped to 102.3, missing the forecast of 102.0 points. This marked a 4-month low. The ongoing U.S-China trade war has hurt the German export sector, as German companies that export to both the U.S. and China are now facing higher tariffs. Germany’s economy posted a rare decline in the third quarter, with a contraction of 0.2%. Another problem is lower eurozone growth, as weak economic activity in the third quarter appears to be the story in the fourth quarter. As well, the looming departure of Britain from the European Union and the crisis over the Italian budget have weighed on business and consumer confidence levels in Germany.

Jay Powell’s dovish holiday surprise

Aussie drifts lower after data miss

EUR/USD Fundamentals

Thursday (November 29)

  • All Day – German Preliminary CPI. Estimate 0.2%
  • 2:45 French Consumer Spending. Estimate 0.5%. Actual 0.8%
  • 2:45 French Preliminary GDP. Estimate 0.4%. Actual 0.4%
  • 3:00 Spanish Flash CPI. Estimate 2.0%. Actual 1.7%
  • 3:55 German Unemployment Change. Estimate -10K. Actual -16K
  • Tentative – Italian 10-year Bond Auction
  • 6:30 ECB Financial Stability Review
  • 8:30 US Core PCE Price Index. Estimate 0.2%
  • 8:30 US Personal Spending. Estimate 0.4%
  • 8:30 US Personal Income. Estimate 0.4%
  • 8:30 US Unemployment Claims. Estimate 221K
  • 10:00 US Pending Home Sales. Estimate 0.8%
  • 10:30 US Natural Gas Storage. Estimate -76B
  • 14:00 US FOMC Meeting Minutes

Friday (November 30)

  • Day 1 – G-20 Meetings
  • 2:00 German Import Prices. Estimate 0.4%
  • 2:00 German Retail Sales. Estimate 0.4%
  • 5:00 Eurozone CPI Flash Estimate. Estimate 2.1%
  • 5:00 Eurozone Core CPI Flash Estimate. Estimate 1.1%
  • 5:00 Eurozone Unemployment Rate. Estimate 8.0%
  • 9:45 US Chicago PMI. Estimate 58.6

*All release times are EST

*Key events are in bold

EUR/USD for Thursday, November 29, 2018

EUR/USD for November 29 at 6:00 EST

Open: 1.1367 High: 1.1398 Low: 1.1364 Close: 1.1354

EUR/USD Technical

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

EUR/USD was flat in the Asian and this trend continues in European trade

  • 1.1300 is providing support
  • 1.1434 is the next line of resistance
  • 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 and macroeconomic analysis, Kenny Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in major online financial publications including, Seeking Alpha and FXStreet. Kenny has been a MarketPulse contributor since 2012.