EUR/USD – Flat as Markets Eye US GDP Report

EUR/USD is flat on Tuesday, as the pair trades at 1.0920 in the European session. Taking a look at economic news, German numbers met expectations. Import Prices continues to decline, and came in at -0.2%. Consumer Climate remained steady at 9.3 points. Over in the US, the markets are awaiting US Final GDP for the third quarter, with the estimate standing at 1.9%. Today’s other important event is US Existing Home Sales.

The US Federal Reserve took the plunge after months of standing on the sidelines, and raised interest rates by 0.25 percent last week, the first upward move since June 2006. The Fed dropped a broad hint in its October policy meeting about a rate hike before the end of 2015, and predictably, investors and traders were busy trying to guess whether the Fed would indeed press the rate trigger. To the credit of Fed chief Janet Yellen and her colleagues, the Fed put into place a carefully-crafted strategy, sending a steady of stream of signals that it was intending to tighten monetary policy, if economic conditions remained positive. This gave the markets ample time to price in a rate hike, and currency market volatility was not excessive after the US rate hike, the first in almost 10 years. Although a hike of 0.25 percent is expected to have limited economic impact, the psychological aspect of the rate move cannot be overemphasized, as the Fed has given the US economy a critical vote of confidence. As well, this move is expected to be the first in a series of incremental rate hikes over the course of 2016.

Overshadowed by the market buzz over around Fed rate hike, Eurozone releases were solid last week. On the manufacturing front, German, French and Eurozone Manufacturing PMIs all slightly exceeded their estimates, and all remained above the 50-point level, which indicates expansion in the manufacturing sector. Earlier in the week, German and Eurozone ZEW confidence reports both improved sharply. On Thursday, German Ifo Business Climate remained steady, posting a strong reading of 108.7 points. However, this was short of the estimate of 109.2 points. These solid numbers have helped bolster the euro, has enjoyed an excellent month of December, gaining about 350 points.

EUR/USD Fundamentals

Tuesday (Dec. 22)

  • 7:00 German Import Prices. Estimate -0.2%. Actual -0.2%
  • 7:00 GfK German Consumer Climate. Estimate 9.3 points. Actual 9.4 points
  • 13:30 US Final GDP. Estimate 1.9%
  • 13:30 US Final GDP Price Index. Estimate 1.3%
  • 14:00 US HPI. Estimate 0.4%
  • 14:00 Belgian NBB Business Climate. Estimate -4.0 points
  • 15:00 US Existing Home Sales. Estimate 5.32M
  • 15:00 US Richmond Manufacturing Index. Estimate -1 point

*Key releases are highlighted in bold

*All release times are GMT

EUR/USD for Tuesday, December 22, 2015

EUR/USD December 22 at 11:25 GMT

EUR/USD 1.0911  H: 1.0944 L: 1.0902

EUR/USD Technical

S1 S2 S1 R1 R2 R3
1.0659 1.0732 1.0847 1.0941 1.1087 1.1172
  • EUR/USD has showed marginal movement in the Asian and European sessions.
  • 1.0847 is providing support.
  • 1.0941 was tested earlier in resistance and is a weak line
  • Current range: 1.0847 to 1.0941

Further levels in both directions:

  • Below: 1.0847, 1.0732, 1.0659 and 1.0550
  • Above: 1.0941, 1.1087 and 1.1172

OANDA’s Open Positions Ratio

EUR/USD ratio is showing limited movement, reflective of the lack of movement from the pair. Short positions command a strong majority (61%). This is indicative of trader bias towards the euro losing ground.

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.