EUR/USD has posted gains in the Wednesday session, as the pair trades slightly above the 1.0930. On the release front, GfK German Consumer Climate fell short of expectations, coming in at 9.7 points. In the US, today’s highlight is New Home Sales. The indicator is expected to drop to 601 thousand. On Thursday, the US will release Core Durable Goods Orders and Unemployment Claims.
German consumer confidence was lower than expected in October. GfK Consumer Climate dipped below the symbolic ten-point mark for the first time since May. Business confidence took the opposite direction, as German Ifo Business Climate rose to 110.5 in October, improving for a second straight month. Earlier in the month, the well-respected ZEW economic sentiment surveys for Germany and the Eurozone also pointed upwards. The German economy has shown signs of improvement, prompting the government to upgrade its growth forecast from 1.7 percent to 1.8 percent for 2016.
Market sentiment over a Fed rate hike continues to rise. The CME Fed Watch has priced a December rate hike at 72%. The prospect of a US rate hike for the first time in over a year has bolstered the US dollar against its rivals, including the euro. EUR/USD is down 2.8 percent in October, as the euro struggles to remain above the 1.09 line.
The US economy remains strong, buoyed by a labor market that is close to capacity, with unemployment at a healthy 5.0%. Inflation levels remain low and are unlikely to show much improvement in the next few months. Although the Fed would prefer stronger inflation levels, other economic indicators remain strong enough such that the lack of inflation is unlikely to be the critical factor in the Fed rate decision. The Fed will also hold a policy meeting in early November, but it’s unlikely to make any rate moves just before the US presidential election.
EUR/USD Fundamentals
Wednesday (October 26)
- 6:00 German Import Prices. Estimate 0.1%. Actual 0.1%
- 6:00 GfK German Consumer Climate. Estimate 10.1 points. Actual 9.7 points
- 8:00 Italian Retail Sales. Estimate +0.2%. Actual -0.1%
- 12:30 US Goods Trade Balance. Estimate -60.6B
- 12:30 US Preliminary Wholesale Inventories. Estimate 0.1%
- 13:45 US Flash Services PMI. Estimate 52.4
- 14:00 US New Home Sales. Estimate 601K
- 14:30 US Crude Oil Inventories. Estimate 0.7M
Upcoming New Events
Thursday (October 27)
- 12:30 US Core Durable Goods Orders. Estimate 0.2%
- 12:30 US Unemployment Claims. Estimate 261K
*All release times are EDT
* Key events are in bold
EUR/USD for Wednesday, October 26, 2016
EUR/USD October 26 at 9:25 GMT
Open: 1.0886 High: 1.0933 Low: 1.0874 Close: 1.0925
EUR/USD Technical
| S1 | S2 | S1 | R1 | R2 | R3 |
| 1.0616 | 1.0708 | 1.0821 | 1.0957 | 1.1054 | 1.1150 |
- EUR/USD was flat in the Asian session. The pair has posted slight gains in European trade
- 1.0821 is providing support
- There is resistance at 1.0957
Further levels in both directions:
- Below: 1.0821, 1.0708 and 1.0616
- Above: 1.0957, 1.1054, 1.1150 and 1.1278
- Current range: 1.0821 to 1.0957
OANDA’s Open Positions Ratio
EUR/USD ratio is unchanged in the Wednesday session. Currently, long positions have a strong majority (63%), indicative of trader bias towards EUR/USD continuing to gain ground.