EUR/USD – Euro edges higher as eurozone inflation as expected

EUR/USD continues to have an uneventful week. On Wednesday, the pair is trading at 1.1308, up 0.24% on the day. On the release front, eurozone CPI dipped to 0.8%, matching the forecast. The eurozone trade surplus jumped to EUR 19.5 billion in February, its highest level since April. There are no major U.S. events on the schedule. Thursday will be busy on both sides of the pond. Germany and the eurozone release services and manufacturing PMIs, and the U.S. posts retail sales and umemployment claims.

Eurozone inflation is steady, but remains well below the ECB target of 2.0 percent. The eurozone annual inflation rate edged lower to 1.4% in March, compared to 1.5% in February. Low inflation means that the ECB is not under pressure to raise interest rates. After last week’s policy meeting, Mario Draghi noted that the economic outlook for the eurozone remains weak. With no interest hikes in sight and a sluggish eurozone economy, the euro will have likely have trouble making headway against the U.S. dollar.

There was positive news from the German ZEW economic sentiment survey, a key gauge of investor confidence. The indicator has been mired in negative territory for the past 12 months, and finally climbed into territory in April. The score of 3.1 points to slight optimism on the part of institutional investors and analysts. The eurozone indicator showed a similar trend, climbing to 4.5 points, its first gain since May. The improvement in investor mood is attributable to the Brexit extension, which will give the parties time until October to try to reach a resolution to the deadlock. The ZEW said that investors were hopeful that the global economy would develop “less poorly” than expected. At the same time, eurozone growth remains weak and Germany is expected to cut its growth forecast for 2019. This is largely a result of the global trade war, which has hurt the German export sector.

EUR/USD Fundamentals

Wednesday (April 17)

• 4:00 Eurozone Current Account. Estimate 33.2B. Actual 26.8B

• 5:00 Eurozone Final CPI. Estimate 1.4%. Actual 1.4%

• 5:00 Eurozone Final Core CPI. Estimate 0.8%. Actual 0.8%

• 5:00 Eurozone Trade Balance. Estimate 16.8B. Actual 19.5B

• 5:03 Italian Trade Balance. Estimate 2.62B. Actual 3.27B

• 5:36 German 30-year Bond Auction. Actual 0.68/2.1

• 8:30 US Trade Balance. Estimate -53.5B

• 10:00 US Final Wholesales Inventories. Estimate 0.4%

• 10:30 US Crude Oil Inventories. Estimate -1.2M

• 12:45 US FOMC Member Bullard Speaks

• 14:00 US Beige Book

Thursday (April 18)

• 2:00 German PPI. Estimate 0.2%

• 3:30 German Flash Manufacturing PMI. Estimate 45.2

• 3:30 German Flash Services PMI. Estimate 55.0

• 4:00 Eurozone Flash Manufacturing PMI. Estimate 48.1

• 4:00 Eurozone Flash Manufacturing PMI. Estimate 53.1

• 8:30 US Core Retail Sales. Estimate 0.7%

• 8:30 US Retail Sales. Estimate 0.9%

• 8:30 US Philly Fed Manufacuturing Index. Estimate 11.2

• 8:30 US Unemployment Claims. Estimate 207K

EUR/USD Technical

EUR/USD edged higher in the Asian session and is showing little movement in European trade

• 1.1300 remains fluid. It is a weak support line

• 1.1434 is the next resistance line

• Current range: 1.1212 to 1.1300

Further levels in both directions:

• Below: 1.1300, 1.1212, 1.1120 and 1.1046

• Above: 1.1434, 1.1553 and 1.1622