EUR/USD – Euro Edges Lower Ahead of German Preliminary CPI

EUR/USD has posted slight losses in the Wednesday session. Currently the pair is trading at 1.1945, down 0.22% on the day. On the release front, German Preliminary CPI will be published later in the day, with the indicator expected to weaken and post a small gain of 0.1%. In the US, there are two key events – ADP Nonfarm Payrolls is expected to rise to 185 thousand, and Preliminary GDP is expected to gain 2.7%. On Thursday, Germany releases Retail Sales and the euro zone releases CPI Flash Estimate. In the US, there are a host of key events, led by unemployment claims.

It’s up, up and away for the streaking euro, which as soared 12.0% since April 1. On Tuesday, the currency pushed above the 1.20 level for the first time since January 2017. The euro has benefited from stronger growth in the eurozone in 2017, led by robust growth in Germany. As well, investors are anticipating that the ECB will provide some guidance on plans regarding its asset purchase program (QE), which is scheduled to terminate in December. The ECB is widely expected to taper its QE program early next year, but so far has been mum about its plans. Analysts expect the ECB to address its stimulus package at the next policy meeting on September 7.

Anyone hoping for some fireworks at last week’s meeting of central bankers in Jackson Hole came away disappointed. On Friday, ECB President Mario Draghi took a page out of Janet Yellen’s page book, opting to steer away from any discussion about ECB monetary policy. Instead, Draghi spoke about the importance of free trade and financial reforms. Draghi seems to have learned a lesson from a meeting of central bankers in Portugal in June, when the markets seized on his comments that the euro zone was undergoing a broad recovery, and the euro soared. However, Draghi won’t receive another free pass next month, when the ECB holds its next policy meeting, and is expected to address its ultra-accommodative monetary policy.

The US economy continues to perform well, and the economy receives a report card on Wednesday, with the release of Preliminary GDP for the second quarter. US growth in Q1 was weak, with Final GDP coming in at 1.4%. However, Q2 is looking much better, with Preliminary GDP expected to gain 2.7%. The US consumer remains very optimistic about the economy, buoyed by a red-hot labor market. In August, CB Consumer Confidence accelerated to 122.9 in August, above the estimate of 120.9 points. Still, the optimism has not translated into strong consumer spending, and the lack of spending has contributed to weak inflation levels.

EUR/USD Fundamentals

Wednesday (August 30)

  • All Day – German Preliminary CPI. Estimate 0.1%
  • 3:00 Spanish Flash CPI. Estimate 1.7%. Actual 1.6%
  • Tentative –  Italian 10-y Bond Auction
  • 8:15 US ADP Nonfarm Employment Change. Estimate 185K
  • 8:30 US Preliminary GDP. Estimate 2.7%
  • 8:30 US Preliminary GDP Price Index. Estimate 1.0%
  • 9:15 US FOMC Member Jerome Powell Speaks
  • 10:30 US Crude Oil Inventories. Estimate -1.8M

Upcoming Events

Thursday (August 31)

  • 2:00 German Retail Sales. Estimate -0.5%
  • 5:00 Euro zone CPI Flash Estimate. Estimate 1.4%
  • 8:30 US Unemployment Claims. Estimate 237K
  • 8:30 US Personal Spending. Estimate 0.4%
  • 9:45 US Chicago PMI. Estimate 58.7
  • 10:00 US Pending Home Sales. Estimate 0.4%

*All release times are GMT

*Key events are in bold

EUR/USD for Wednesday, August 30, 2017

EUR/USD Wednesday, August 30 at 6:10 EDT

Open: 1.1972 High: 1.1984 Low: 1.1938 Close: 1.1945

EUR/USD Technical

S1 S2 S1 R1 R2 R3
1.1616 1.1712 1.1876 1.1996 1.2108 1.2221

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

  • 1.1876 is providing support
  • 1.1996 is the next resistance line

Further levels in both directions:

  • Below: 1.1876, 1.1712 and 1.1616
  • Above: 1.1996, 1.2108, 1.2221 and 1.2358
  • Current range: 1.1876 to 1.1996

OANDA’s Open Positions Ratio

EUR/USD ratio is unchanged in the Wednesday session. Currently, long positions have a majority (65%), indicative of EUR/USD continuing to move higher.

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.