EUR/USD has edged upwards on Thursday, following sharp losses in the Wednesday session. Currently, the pair is trading at 1.0570. With US markets closed for the Thanksgiving holiday, trade will likely remain light until next week. On the release front, German Ifo Business Climate was unchanged at 110.4 in November. German Final GDP posted a slight gain of 0.2%, matching the forecast. As well, the ECB released its semi-annual Financial Stability Review, which raised concerns about market risks due to political instability.
The US dollar posted sharp gains on Wednesday, bolstered by excellent durable goods reports. Core Durable Goods Orders rose 1.0%, well above the estimate of 0.2%. Durable Goods Orders surged 4.8%, crushing the estimate of 1.2%. These strong numbers point to a welcome improvement in business investment, and strong consumer fundamentals could see business spending numbers continue to improve. There was positive news on the consumer front, as the UoM Consumer Sentiment index climbed to 93.8, above the forecast of 91.6.
The euro remains under pressure and has dropped down to 1.0517 on Thursday, its lowest level since November 2015. Will the slide continue? A chronically weak Eurozone economy, low interest rates and negative yields have all taken a heavy toll on the currency, and there is growing talk of the euro dropping to parity with the high-flying US dollar. The last time the currencies were at parity was in December 2002. With a strong US economy and monetary divergence continuing to favor the US dollar, the pair could head lower.
The US dollar has posted impressive gains since Donald Trump won the US election earlier this month. The Brexit vote and Trump’s stunning win have fanned populism across the continent, threatening the integrity of the Eurozone. With a Fed rate hike in December a near-certainty, sentiment towards the dollar should remain high. However, Trump’s economic policy remains a mystery, so what will happen in early 2017 is a big question mark which could translate into volatility in the markets. Trump’s election platforms of increased spending and less taxes have been short on content and we will have to wait for the new Trump administration to unveil a detailed economic platform. Where does this leave the Federal Reserve? The Fed is in favor of gradual rate hikes next year, but this assumes that the US economy continues to strengthen. In testimony before a congressional committee last week, Fed chair Janet Yellen acknowledged the uncertainty created by Trump’s victory and said that the Fed might have to adjust its outlook, based on the new president’s economic policies.
EUR/USD Fundamentals
Thursday (November 24)
- 7:00 German Final GDP. Estimate 0.2%. Actual 0.2%
- 9:00 German Ifo Business Climate. Estimate 110.6. Actual 110.4
- 9:08 ECB Financial Stability Review
- 12:00 GfK German Consumer Climate. Estimate 9.8
- 14:00 Belgian NBB Business Climate. Estimate -1.5
*All release times are GMT
* Key events are in bold
EUR/USD for Thursday, November 24, 2016
EUR/USD November 24 at 11:20 GMT
Open: 1.0541 High: 1.0578 Low: 1.0517 Close: 1.0570
EUR/USD Technical
| S1 | S2 | S1 | R1 | R2 | R3 |
| 1.0287 | 1.0414 | 1.0506 | 1.0616 | 1.0708 | 1.0821 |
- EUR/USD showed little movement in the Asian session but has reversed directions and is moving upwards in European trade
- 1.0506 is providing support
- 1.0616 is a weak resistance line
Further levels in both directions:
- Below: 1.0506, 1.0414 and 1.0287
- Above: 1.0616, 1.0708, 1.0821 and 1.0957
- Current range: 1.0506 to 1.0516
OANDA’s Open Positions Ratio
EUR/USD ratio is unchanged in the Thursday session. Currently, short positions have a majority (66%), indicative of trader bias towards EUR/USD reversing directions and moving to lower ground.