EUR/USD – Euro subdued, U.S consumer spending next

EUR/USD is flat in the Wednesday session. Currently, the pair is trading at 1.1317, down 0.08% on the day. On the release front, there are no major eurozone or German events. In the U.S., well get a look at consumer inflation for May. CPI is expected to dip to 0.1%, while core CPI is projected to improve to 0.2%. On Thursday, Germany releases Final CPI and the eurozone posts industrial production. The U.S. will release unemployment claims.

The Federal Reserve shook up the currency markets last week, as the comments from Fed chair Jerome Powell and FOMC member James Bullard hinted at a rate cut later in the year. Since raising rates in December, the Fed has been neutral with regard to the direction of the next rate move, but rising trade tensions have raised fears of a slowdown in the U.S. economy. This has prompted the Fed to reconsider a rate cut later this year. The CME Group has projected a 66% likelihood for a rate cut at the July meeting, up sharply from a month ago, when the odds of a July cut were just 16%. Fed officials will be keeping a close eye on the May CPI numbers – if inflation remains at very low levels, as expected, there will be more pressure on the Fed to lower rates in order to boost economic activity and inflation.

The ECB is also in dovish mode, which is no surprise, given the economic slowdown which has gripped the eurozone. Germany, the locomotive of the bloc, is also grappling with weaker economic conditions. The manufacturing sectors in Germany and the eurozone continue to contract, as a weak global economy has led to reduced appetite for European exports. This has hurt key sectors such as the German auto industry. If the bitter U.S-China trade row continues, the slowdown in the eurozone could worsen.

Yuan steady as China inflation accelerates

European open – The end of the road

 

EUR/USD Fundamentals

Wednesday (June 12)

• 1:30 French Final Private Payrolls. Estimate 0.3%. Actual 0.5%

• 5:35 German 10-year Bond Auction. Actual -0.24/1.7

• 8:30 US CPI. Estimate 0.1%

• 8:30 US Core CPI. Estimate 0.2%

• 10:30 US Crude Oil Inventories. Estimate -1.0M

• 13:01 US 10-year Bond Auction

• 14:00 US Federal Budget Balance. Estimate -199.2B

Thursday (June 13)

• 2:00 German Final CPI. Estimate 0.2%

• 5:00 Eurozone Industrial Production. Estimate -0.4%

• 8:30 US Unemployment Claims.  Estimate 215K

 

Open: 1.1326 High: 1.1343 Low: 1.1316 Close: 1.1317

 

EUR/USD Technical

EUR/USD was flat for most of the Asian session and has edged lower in European trade

• 1.1300 is a weak support line

• 1.1434 is the next resistance line

• Current range: 1.300 to 1.1434

Further levels in both directions:

• Below: 1.1300, 1.1212, 1.1120 and 1.1046

• Above: 1.1434, 1.1553 and 1.1621