Analysis

EUR/USD – Euro remains listless, German consumer confidence slips

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EUR/USD continues to drift this week. Currently, the pair is trading at 1.1325, up 0.11% on the day. On the release front, German GfK Consumer Climate fell to 10.4, shy of the estimate of 10.8 points. In the U.S., building permits is projected to dip to 1.32 million. CB consumer confidence is expected to improve to 132.1 points.

German consumer confidence disappointed in March. The indicator slipped to 10.4, after two successive readings of 10.8 points. With the eurozone mired in an economic slowdown and German numbers pointing to weaker growth, it’s not surprising that the German consumer is less optimistic. This release comes on the heels of German business confidence, which improved slightly in March, with a reading of 99.6 points. The markets have been accustomed to releases above the 100-level, and the February reading of 98.5 was the weakest since November 2014. The survey noted that any improvement was confined to domestic sectors, such as construction and retail services. The manufacturing sector remains weak, battered down by the ongoing global trade war, which has dampened the appetite for German exports, such as vehicles and auto parts. Germany’s economy slowed down in the fourth quarter, and this bodes poorly for the rest of the eurozone.

Is a recession in the cards for the U.S. economy? At last week’s policy meeting, the Federal Reserve indicated it had no plans to raise interest rates in 2019 and also lowered its growth forecast for 2019 to 2.1%, down from 2.3% in December. There was more bad news on Friday, as the spread between 3-month and 10-year Treasury notes turned negative for the first time since 2007. This is known as an inverted yield curve, which is considered a recession indicator. All eyes will be on U.S Final GDP, which will be released on Thursday. If GDP is weaker than expected, investors could lose their risk apetite and the Canadian dollar could lose ground.

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EUR/USD Fundamentals

Tuesday (March 26)

3:00 German GfK Consumer Climate. Estimate 10.8. Actual 10.4
6:30 US FOMC Member Evans Speaks 8:30 US Building Permits. Estimate 1.32M 8:30 US Housing Starts. Estimate 1.22M 9:00 US HPI. Estimate 0.4% 9:00 Us S&P/CS Composite-20 HPI. Estimate 4.3% 10:00 US CB Consumer Confidence. Estimate 132.1 10:00 US Richmond Manufacturing Index. Estimate 12

*All release times are DST

*Key events are in bold

EUR/USD for Tuesday, March 26, 2019

EUR/USD for March 26 at 6:55 DST

Open: 1.1312 High: 1.1326 Low: 1.1303 Close: 1.1325

EUR/USD Technical

S1 S2 S1 R1 R2 R3 1.1120 1.1212 1.1300 1.1434 1.1553 1.1610

EUR/USD was flat in the Asian session and is showing little movement in European trade

1.1300 remains a weak support level 1.1434 is the next resistance line Current range: 1.1300 to 1.1434

Further levels in both directions:

Below: 1.1300, 1.1212, 1.1120 and 1.1046 Above: 1.1434, 1.1553 and 1.1610

This article is for general information purposes only. It is not investment advice

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Kenny Fisher joined OANDA in 2012 as a Currency Analyst. Kenny writes a daily column about current economic and political developments affecting the major currency pairs, with a focus on fundamental analysis. Kenny began his career in forex at Bendix Foreign Exchange in Toronto, where he worked as a Corporate Account Manager for over seven years.

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