EUR/USD is ticking below support of 1.2440, as markets await the all important inflation data, that could fall below the previous cycle lows. And also for the future, inflation, at least headline inflation, is likely to continue falling: OPEC did not agree on a cut and oil prices continue plunging. Will the ECB act next week? In the meantime, liquidity remains low on Black Friday.
Here’s a quick update on technicals, fundamentals and sentiment moving the pair.
- Asian session: The pair traded steadily under 1.2570, and fell in the European session.
- Current range: 1.2440 to 1.25.
Further levels in both directions:
- Below: 1.2360, 1.2250, 1.2140, 1.2042.
- Above: 1.2440, 1.25, 1.2570, 1.2620 and 1.2660
- 1.2360 is the multi-year low the double bottom.
- 1.2570 is the next resistance line, but it is hard to reach.
- 7:00 German Retail Sales. Exp. 1.7%, actual 1.9%.
- 7:45 French Consumer Spending. Exp. +0.2%, actual -0.2%.
- 10:00 Euro-zone CPI. Exp. +0.3%.
- 10:00 Euro-zone Core CPI. Exp. 0.7%.
- 10:00 Euro-zone unemployment rate. Exp. 11.5%.
* All times are GMT.
For more events and lines, see the Euro to dollar forecast.
- Even weaker inflation: The fall in oil prices and a relatively stable euro during October resulted in a very weak German inflation figure of 0.5% in HICP. Also Spanish inflation fell short. This means that EZ CPI, which is currently at the lowest levels in years, could fall even closer to zero. Adding the OPEC decision not to cut and the resulting extension of falling oil prices, at least headline inflation is set to fall even further.
- More unconvincing US data: While US GDP growth was actually revised to the upside, to 3.9%, the components are still not convincing enough: consumer spending is at 2.2% and inventory buildup now means payback later on. The bigger blow came from the disappointing CB Consumer Confidence. This kept the greenback depressed. Durable goods orders saw a beat in the headline number but a miss on the core, jobless claims badly disappointed with a rise above 300K and new home sales also fell short of predictions. Only the Fed eyed Core PCE Price Index beat expectations.
- QE is becoming a question of when: ECB Vice President Constancio talked about making a decision on QE during Q1. He went further to provide justification (well, low inflation for a long time), details (sovereign bond buying will be according to proportional GDP) and timing: Q1. The keys are in Draghi’s hands which already hit the euro hard on Friday. We are now in a quiet period towards the decision on Thursday.