EUR/USD is steady on Tuesday, with the pair trading at 1.1350 early in Tuesday’s European session. It’s another quiet day on the release front. In the Eurozone, German PPI posted a decline of 0.4%, and the Eurozone Trade Balance dropped to EUR 17.7 billion. Today’s only key event is US Building Permits. We’ll also get a look at US housing starts. Both releases are expected to stay close to the previous month’s reading.
Weak Eurozone data continues to concern the markets and is weighing on the euro. German PPI, which measures inflation in the manufacturing sector, is struggling, having posted three declines in the past four months. The reading of -0.4% in September fell short of the estimate of -0.1%, pointing to deflation in the Eurozone’s largest economy. There was further bad news as the Eurozone trade surplus narrowed to EUR 17.7 billion in August, short of the estimate of EUR 20.1 billion. This marked the bloc’s smallest surplus in 14 months.
With the Eurozone struggling with little growth and a lack of inflation, the ECB is under growing pressure to respond. The central bank would love to lower rates, but there isn’t much room for such a step, as current rates stand at record low levels of 0.05%. This means that the ECB would have to expand the current QE program of EUR 60 billion/mth. The ECB has bought almost half a trillion euros of debt under QE, but the bloc’s economy hasn’t responded. Analysts expect an additional move before the end of the year, but traders should not discount the possibility of further stimulus at the ECB policy meeting on Thursday. If the ECB does make a move on Thursday, we can expect the euro to lose ground against the dollar. The ECB could also reduce the direct deposit rate, which stands at -0.2%, but this does not appear likely.
US key releases on Friday were a mixed bag. UoM Consumer Sentiment, the primary gauge of consumer confidence, jumped to 92.1 points in October, up from 85.7 points. This easily beat the estimate of 88.8 points. At the same time, JOLTS Job Openings slipped to 5.37 million, way off the estimate of 5.77 million. The JOLTS release is especially important as it is watched closely by the Fed and is a factor in its decision-making process regarding monetary policy.
EUR/USD Fundamentals
Monday (Oct. 19)
- 6:00 German PPI. Estimate -0.1%. Actual -0.4%.
- 8:00 Eurozone Current Account. Estimate 20.1B. Actual 17.7B.
- 12:30 US Building Permits. Estimate 1.16M
- 12:30 US Housing Starts. Estimate 1.14M.
- 13:00 FOMC Member William Dudley Speaks.
- 13:15 FOMC Member Jerome Powell Speaks.
- 15:00 Federal Reserve Chair Janet Yellen Speaks.
*Key releases are highlighted in bold
*All release times are GMT
EUR/USD for Tuesday, October 20, 2015
EUR/USD October 20 at 9:15 GMT
EUR/USD 1.1354 H: 1.1364 L: 1.1324
EUR/USD Technical
| S1 | S2 | S1 | R1 | R2 | R3 |
| 1.1105 | 1.1214 | 1.1296 | 1.1392 | 1.1470 | 1.1658 |
- EUR/USD was unchanged in the Asian session and has posted slight gains in European trading.
- 1.1296 is an immediate support line.
- 1.1392 is a weak resistance line and could be tested during the day.
- Current range: 1.1296 to 1.1392
Further levels in both directions:
- Below: 1.1296, 1.1214, 1.1105 and 1.1017
- Above: 1.1392, 1.1470, 1.1658, 1.1712 and 1.1871
OANDA’s Open Positions Ratio
EUR/USD ratio continues to show a strong majority of open positions (60%) on Tuesday. This points to trader sentiment in favor of the dollar gaining ground against the euro.