EUR/USD – Little Movement Ahead of German CPI

The euro has posted small losses on Tuesday, as EUR/USD trades at 1.1170. On the release front, Germany will release Preliminary CPI, with an estimate of 0.1%. In the US, CB Consumer Confidence is expected to remain steady, with a forecast of 97.2 points. On Wednesday, the Eurozone will release the CPI Flash Estimate. The US will release two key events – ADP Nonfarm Employment Change and Pending Home Sales. 

The euro dropped 100 points on Friday, following Janet Yellen’s highly-anticipated speech at Jackson Hole. The Fed chair’s message to the markets was clearly upbeat, as she said that the case for a rate increase had “strengthened in recent months”. Yellen noted that the economy was close to maximum employment, inflation was steady, and consumer spending remained solid. At the same time, Yellen did not provide any timeline on a rate hike nor did she spell out what the Fed wants to see before pressing the rate trigger. On Friday, Fed members Dennis Lockhart and Stanley Fischer both came out in favor of two rate hikes in 2016, and these comments helped the dollar record broad gains on Friday. The Fed’s stance has raised the odds of a rate move according to the CME Group FedWatch tool, with a September hike priced at 30% in September and 57% for a December hike. However, given that any move by the Fed will be data-dependent, US numbers ahead of the Fed policy meeting on September 21 could significantly change the rate outlook.

The markets will get a good look at Eurozone inflation numbers on this week. Germany will release Preliminary CPI, with the index expected to drop to just 0.1%. On Wednesday, the Eurozone publishes CPI Flash Estimate, with a forecast of 0.3%. Despite ultra-low interest rates, inflation remains at rock-bottom levels, hampering the Eurozone economy. Additional soft inflation numbers this week will add pressure on the ECB to adopt further monetary easing at its policy meeting on September 7. The German economy expanded 0.4% in the second quarter, but failed to keep up with the first quarter’s pace of 0.7%. Domestic consumption continues to power the economy, with low inflation and zero interest rates spurring consumer spending.

EUR/USD Fundamentals

Tuesday (August 30)

  • 6:00 German Import Prices. Estimate -0.1%. Actual +0.1%
  • All Day – German Preliminary CPI. Estimate 0.1%
  • 7:00 Spanish Flash CPI. Estimate -0.5%
  • 8:00 Italian Retail Sales. Estimate 0.2%
  • Tentative – Italian 10-year Bond Auction
  • 13:00 US S&P/CS Composite-20 HPI. Estimate 5.1%
  • 14:00 US CB Consumer Confidence. Estimate 97.2

Wednesday (August 31)

  • 9:00 Eurozone CPI Flash Estimate. Estimate 0.3%
  • 12:15 US ADP Non-Farm Employment Change. Estimate 173K
  • 14:00 US Pending Home Sales. Estimate 0.7%

*All release times are EDT

* Key events are in bold

EUR/USD for Tuesday, August 30, 2016

EUR/USD August 30 at 8:05 GMT

Open: 1.1190 High: 1.1191 Low: 1.1153 Close: 1.1168

EUR/USD Technical

S1 S2 S1 R1 R2 R3
1.0957 1.1054 1.1150 1.1278 1.1376 1.1467
  • EUR/USD posted small losses in the Asian session and is flat in European trade
  •  There is resistance at 1.1278
  • 1.1150 remains a weak support line

Further levels in both directions:

  • Below: 1.1150, 1.1054 and 1.0957
  • Above: 1.1278, 1.1376, 1.1467 and 1.1534
  • Current range: 1.1150 to 1.1278

OANDA’s Open Positions Ratio

EUR/USD ratio is unchanged on Tuesday. Currently, short positions have a majority (57%), indicative of trader bias towards EUR/USD reversing directions and resuming its upward movement.

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.