EUR/USD – Euro edges higher ahead of Eurozone CPI

EUR/USD continues to move higher has posted slight gains in the Friday session.  In European trade, the pair is trading at 1.1354, up 0.22% on the day. On the release front, Germany’s Wholesale Price Index dipped from 0.4% to 0.3% in October, but still beat the estimate of 0.2%. The markets are keeping a close eye on eurozone inflation indicators. Final CPI and Final Core CPI are both expected to improve in October, with forecasts of 2.2% and 1.1%, respectively. There are no major U.S releases on the schedule.

After sharp losses at the start of the week, the euro has reversed directions and recovered, despite some dismal numbers out of Germany. On Wednesday, Germany reported that GDP had declined 0.2%, marking the first contraction in GDP since 2015. If investors are concerned that the largest economy in the eurozone is slowing, they didn’t respond by dumping their euros. German officials put a spin on the weak release, saying that the contraction was largely due to weakness in the auto sector as a result of new pollution standards. In truth, it’s likely that the skid is also due to the global trade war, which has also resulted in U.S. tariffs on European products. Another alarm signal is weak investor confidence. German ZEW Economic Sentiment posted a second straight soft release for November, with a reading of -24.1 points. This points to deep pessimism on the part of institutional investors and analysts. The ZEW added that investors did not expect a rapid recovery from the current weakness, which could weigh on the euro.

Consumer inflation and spending numbers were strong in October, as the U.S. economy remains strong. On Thursday, the U.S released retail sales reports. Retail sales rebounded with a strong gain of 0.7% in October, after a decline of -0.1% a month earlier. Core retail sales jumped 0.8%, after a gain of 0.1% in September. There was good news from the inflation front on Wednesday, as U.S consumer inflation numbers beat their estimates for October. The consumer price index posted a gain of 0.3%, its strongest gain since January. Core CPI, which excludes food and energy prices edged higher to 0.2%, marking a 3-month high. Both releases were in line with forecasts. Core CPI was 2.1% higher than a year ago. The solid consumer data means that the Fed remains on track to continue raising interest rates. The Federal Reserve holds its next policy meeting in December, with the odds of a December rate hike at 72%, according to the CME Group.

Brexit worries dominate market moves

All is a moot point next to Brexit headline watch

EUR/USD Fundamentals

Friday (November 16)

• 2:00 German WPI. Estimate 0.2%. Actual 0.3%
• 3:30 ECB President Draghi Speaks
• 5:00 Eurozone Final CPI. Estimate 2.2%
• 5:00 Eurozone Final Core CPI. Estimate 1.1%
• 6:00 Italian Trade Balance. Estimate 2.87B
• 8:00 German Buba President Weidmann Speaks
• 9:15 US Capacity Utilization Rate. Estimate 78.3%
• 9:15 US Industrial Production. Estimate 0.2%
• 16:00 US TIC Long-Tem Purchases. Estimate 46.2B

*All release times are DST

*Key events are in bold

EUR/USD for Friday, November 16, 2018

EUR/USD for November 16 at 4:30 EST

Open: 1.1329 High: 1.1368 Low: 1.1322 Close: 1.1351

EUR/USD Technical

EUR/USD ticked lower in the Asian session but then recovered. The pair has posted slight gains in European trade

• 1.1300 is providing support
• 1.1434 is the next resistance line
• 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.