EUR/USD has lost ground on Tuesday, as the pair trades in the mid-1.33 range. On the release front, the German and Euro confidence indicators slid last month and were well below expectations. German ZEW Economic Sentiment slipped to 8.6 points, while the Eurozone ZEW Economic Sentiment dropped to 23.7 points. In the US, today’s key event is JOLTS Job Openings, an important employment indicator.
Here is a quick update on what’s moving the pair.
- EUR/USD was uneventful in the Asian session. The pair has weakened in the European session.
- Current range: 1.3325 to 1.3365.
Further levels in both directions:
- Below: 1.3325, 1.3295 and 1.32.
- Above: 1.3365, 1.34, 1.3450, 1.35, 1.3550, 1.3585 and 1.3610.
- 1.3325 remains an immediate support level. 1.3295 follows.
- On the upside, 1.3365 is a weak line. The round number of 1.34 is next.
EUR/USD Fundamentals
- 9:00 German ZEW Economic Sentiment. Estimate 18.2, actual 8.6 points.
- 9:00 Eurozone ZEW Economic Sentiment. Estimate 41.3, actual 23.7 points.
- 11:30 US NFIB Small Business Index. Estimate 96.3 points.
- 14:00 US JOLTS Job Openings. Estimate 4.74M.
- 18:00 US Federal Budget Balance. Estimate -98.2B.
*All times are GMT.
For more events and lines, see the Euro to dollar forecast.
EUR/USD Sentiment
- Euro confidence indicators plunge: German ZEW Economic Sentiment tumbled in July, falling to just 8.6 points, down from 27.1 points a month earlier, and its lowest level since November 2012. The estimate stood at 18.2 points. This is the latest figure in a string of weak German releases. Last week, the trade surplus narrowed and manufacturing numbers missed expectations. With economic indicators pointing downward and confidence in the German economy ebbing, we could see a decline in German GDP in the second quarter, which would likely have a chilling effect on the shaky euro. Eurozone ZEW Economic Sentiment followed a similar path, slipping to 23.7 points, compared to 48.1 points in the previous release. The markets had expected a reading of 41.3 points.
- Geopolitics stable for now: Hotspots in Ukraine and the Middle East remain tense. The US has accused Russia of massing troops on its border with Ukraine, and tensions are high as the EU has slapped stronger sanctions on Russia, while Moscow has retaliated by banning many food imports from the West. The euro-zone could see food prices going down due to excessive supply. In addition, US president Obama has ordered airstrikes in a remote area of Iraq to prevent ISIL extremists from murdering Yazdi civilians, yet this doesn’t disrupt oil production so far. Hamas and Israel reached a fresh truce.
- German manufacturing numbers soften: German data continues to point to trouble in the Eurozone’s largest economy. Industrial Production posted a gain of only 0.3%. Factory Production declined by 3.2%, the steepest drop since October 2012. The Bundesbank is blaming tensions with Russia and stronger EU sanctions against Moscow for the weak economic numbers,
- US jobs data continues to shine: US unemployment indicators are under close scrutiny, as the strength of the labor market is one of the most important factors influencing the Federal Reserve regarding the timing of an interest rate hike. A rate hike is expected by mid-2015, but stronger economic data, especially on the employment front, could hasten a rate move. We’ll get a look at JOLTS Jobs Openings later on Tuesday. The indicator has been on an upswing and exceeded the estimate in the past two releases. Another rise is expected in the July release, with the estimate standing at 4.74 million.
- Inflation levels remains sluggish: The unit labor costs serves as yet another measure of core inflation. Both the Fed favorite Core PCE Price Index as well as Average Hourly Earnings remained low, indicating the Americans don’t have too much money in the their pockets so raising rates to curb demand is not that urgent. The latest FOMC statement did acknowledge that inflation could be closer to target, but expressed concern about the “underutilized” job market.
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