EUR/USD – Euro steady as industrial production sparkles

EUR/USD is steady in the Wednesday session. Currently, the pair is trading at 1.1294, up 0.06% on the day. On the release front, eurozone industrial production sparkled with a gain of 1.4%, above the estimate of 1.0%. In the U.S., there are a host of key events. Core durable goods orders are expected to remain at 0.1%, while core durable goods is forecast to slide by 0.5%. On the inflation front, PPI and Core PPI are both projected to post a slight gain of 0.2%. On Thursday, Germany posts CPI and the U.S. posts unemployment claims.

The eurozone manufacturing sector has struggled, but there was some positive news on Wednesday, as the reading of 1.4% was the strongest gain since August 2017. Germany, the largest economy in the eurozone, has been posting weak manufacturing data. Industrial production fell 0.8% in January, missing expectations. The indicator managed only two gains in the second half of 2018 and has started 2019 with a decline. Last week, factory orders plunged 2.6%, marking a third successive decline. The U.S-China trade war has dampened global growth, which has reduced the demand for German exports and weighed heavily on manufacturing activity.

The Federal Reserve has been in dovish mode since the start of the year, and weak inflation data has meant there is little pressure on policymakers to raise rates in the near future. Core CPI edged down to 0.1%, while CPI remained steady at 0.2%. Consumer inflation remains well below the Federal Reserve’s target of 2.0 percent, so there is little pressure on the Fed to raise rates anytime soon. Policymakers have been signaling that the Fed could stay on the sidelines until the second half of 2019, and this stance was underscored by Fed Chair Powell in a television interview on Sunday. Powell left no doubt about where the Fed stands, saying that the Fed would remain patient and was in no hurry to change interest rate policy. The dovish stance of the Fed could weigh on the dollar, as a lack of rate hikes makes the greenback less attractive to investors.

 

EUR/USD Fundamentals

Wednesday (March 13)

• 5:00 Italian Quarterly Unemployment Rate. Estimate 10.5%. Actual 10.6%

• 6:00 Eurozone Industrial Production. Estimate 1.0%. Actual 1.4%

• Tentative – German 30-year Bond Auction

• 8:30 US Core Durable Goods Orders. Estimate 0.1%

• 8:30 US Durable Goods Orders. Estimate -0.5%

• 8:30 US PPI. Estimate 0.2%

• 8:30 US Core PPI. Estimate 0.2%

• 10:00 US Construction Spending. Estimate 0.4%

• 10:30 US Crude Oil Inventories. Estimate 2.7M

• 13:01 US 30-year Bond Auction

Thursday (March 14)

• 3:00 German Final CPI. Estimate 0.5%

• 8:30 US Unemployment Claims. Estimate 225K

• 10:00 US New Home Sales. Estimate 622K

EUR/USD Technical

S1	S2	S1	R1	R2	R3
1.1046	1.1120	1.1212	1.1300	1.1434	1.1553

EUR/USD was flat in the Asian session and has posted small gains in European session

1.1212 is providing weak support

1.1300 was tested earlier in resistance and is under pressure

Current range: 1.1212 to 1.1300

Further levels in both directions:

Below: 1.1212, 1.1120, 1.1046 and 1.0984

Above: 1.1300, 1.1434 and 1.1553