EUR/USD – Euro Edges Up on German Inflation Report

The euro has edged higher in the Friday session, erasing some of the gains seen on Thursday. Currently, EUR/USD is trading at 1.1140. In the eurozone, German PPI improved to 0.4%, beating the estimate of 0.2%. Later, the eurozone releases current account and consumer confidence. There are no US events on the schedule.

German inflation numbers were stronger in the first quarter, but inflation numbers continue to meet or exceed the forecasts in the second quarter. Producer Prices posted a gain of 0.4% in April, and the Wholesale Price Index gained 0.3% in April. The news was not as good from Final CPI, which dipped to 0.0%, marking a 3-month low. Still, this figure matched the estimate. In the eurozone, Final CPI for April matched the forecast with a strong gain of 1.9% in April, considerably higher than last month’s gain of 1.5%. Eurozone inflation is once again closing in on the ECB’s target of 2.0%, which could increase pressure on the ECB to consider tapering its ultra-loose monetary policy. However, the ECB seems content to hold course on interest rates and its quantitative easing program, and the central bank will be reluctant to make any moves with key elections coming up in France and Germany.

It’s been an excellent week for the euro, as the chaos in Washington continues to unnerve investors and has weighed on the US dollar. The Trump administration is in damage control mode, although there is no sign of the political firestorms letting up any time soon. Facing relentless pressure from Democrats and some Republicans, the Justice Department has appointed a former FBI director as a special prosecutor to investigate possible Russian involvement in the US presidential election as well as any connection between Trump and the Russians during the election campaign. President Trump fired back on Thursday, angrily denouncing this move as a “witch hunt”. The media and the Democrats have had a field day with Trump’s woes, and many Republicans are expressing unease with an administration that appears rudderless and is staggering from crisis to crisis. Trump has been relentlessly dogged by accusations of being cozy with the Russians, and his meeting with the Russian foreign minister last week was a public relations disaster, as Trump came under heavy criticism for releasing classified information at the meeting. The latest string of controversies has had a chilling effect on global stock markets, and many investors have ditched their dollar-held assets in favor of the euro and other currencies.

No Reprieve for Dollar as Trump Troubles Mount

EUR/USD Fundamentals

Friday (May 19)

• 2:00 German PPI. Estimate 0.2%. Actual 0.4%
• 4:00 Eurozone Current Account. Estimate 32.3B
• 10:00 Eurozone Consumer Confidence. Estimate -3

*All release times are EDT

*Key events are in bold

EUR/USD for Friday, May 19, 2017

EUR/USD Friday, May 19 at 4:40 EDT

Open: 1.1103 High: 1.1143 Low: 1.1097 Close: 1.1142

EUR/USD Technical

EUR/USD was flat in the Asian session and has posted slight gains in European trade

• 1.1122 remains a weak support line
• 1.1242 is the next line of resistance

Further levels in both directions:

• Below: 1.1122, 1.0985, 1.0873 and 1.0708
• Above: 1.1242, 1.1366 and 1.1465
• Current range: 1.1122 to 1.1242

OANDA’s Open Positions Ratio

EUR/USD ratio has showed slight movement towards long positions. Currently, short positions have a majority (66%), indicative of EUR/USD reversing directions and moving lower.

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.