EUR/USD – Euro yawns in light-data session

EUR/USD has started the new trading week quietly. Currently, the pair is trading at 1.1161, up 0.03% on the day. On the release front, there are no major events, so traders can expect the pair to continue to drift in the Monday session. German PPI gained 0.5%, following two successive declines. Later in the day, eurozone trade balance is expected to show a surplus of EUR 24.2 billion, down from EUR 26.8 billion a month earlier. On Tuesday, the eurozone releases consumer confidence and the U.S. posts existing home sales.

The euro lost some ground last week, but there were bright signs in Germany and the eurozone, as GDP and inflation headed upwards. German Preliminary GDP improved to 0.4% in the first quarter, after a flat zero reading in Q4 of 2018. In the eurozone, Flash GDP also climbed to 0.4% in the first quarter, up from 0.2% in Q4. On the inflation front, inflation indicators impressed, with sharp gains in April. Final CPI climbed 1.7%, matching the forecast. This was up sharply from 0.8% in March. Final Core CPI rose 1.3%, edging above the estimate of 1.2%. This marked the strongest gain since March 2013. The ECB recently stated that it had no plans to raise interest rates prior to the spring of 2020, but if GDP and inflation numbers continue to improve, the ECB could raise rates earlier than this timeline.

Federal Reserve Chair Jerome Powell will speak at an event on Monday, and there are a dozen Fed speakers at various venues during the week. Still, investors don’t expect to hear anything new from the Fed, which has said that the next rate move could be in either direction. The markets have priced in a rate cut later this year, and some analysts are predicting a second rate cut before 2020. This could take dampen enthusiasm for the strong U.S. dollar, as rate cuts would make the greenback less appealing to investors.

EUR/USD Fundamentals

Monday (May 20)

• 6:00: German PPI. Estimate 0.4%. Actual 0.5%

• 8:00 German Current Account. Estimate 24.2B

• 10:00 German Buba Monthly Report

• 17:05 US FOMC Member Clarida Speaks

• 23:00 US Federal Reserve Chair Powell Speaks

Tuesday (May 21)

• 14:00 Eurozone Consumer Confidence. Estimate -8

• 14:00 US Existing Home Sales. Estimate 5.35M

EUR/USD Technical

EUR/USD inched higher in the Asian session but then retracted. The pair has posted small gains in European trade

• 1.1120 is providing support

• 1.1212 is the next resistance line

•  Current range: 1.1120 to 1.1212

Further levels in both directions:

• Below: 1.1120, 1.1046 and 1.0950

• Above: 1.1212, 1.1300, 1.1434 and 1.1553