EUR/USD is steady on Monday, as the pair tries to find its footing following last week’s slide of about 170 points. EUR/USD is trading in the high 1.27 range, its lowest level since September 2002. On the release front, Germany releases Preliminary CPI, a key release. The markets are keeping their expectations low, with an estimate of -0.1%. In the US, today’s highlight is Pending Home Sales. After a sharp gain of 3.3% in July, the markets are braced for a sharp downturn, with an estimate of -0.4%.
Friday’s German releases underscored that the Eurozone’s largest economy is in trouble. GfK Consumer Climate dipped to 8,3 points, its lowest level in 2014. Import Prices posted a second straight decline, coming in at -0.1%. This followed Ifo German Business Climate, which weakened for a fifth straight month. The sputtering Eurozone is dependent on the German locomotive to pull the region’s economy back on track, and the shaky euro will have difficulty stabilizing if German data does not improve.
On Thursday, the euro lost ground after ECB head Mario Draghi spoke in Lithuania. Draghi reiterated that the ECB stood prepared to implement additional unconventional steps if prolonged low inflation levels did not rise. Draghi acknowledged that summer economic data was weaker than expected, but said the central bank forecast modest growth in Q3 and Q4. Lithuania is set to join the Eurozone in January and will become the 19th member of the Euro region.
In the US, Core Durable Goods Orders posted a strong gain of +0.7%, bouncing back from the previous reading of -0.8%. Durable Goods Orders continues to take its riders on a roller coaster ride, plunging 18.2% in August, compared to a huge gain of 22.6% a month earlier. Unemployment Claims rose to 293 thousand, within expectations.
EUR/USD 1.2675 H: 1.2698 L: 1.2664
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