EUR/USD

EUR/USD has edged lower on Friday, as the pair trades in the high-1.28 range in the European session. The euro has lost about 100 points this week and remains under pressure. Trade is expected to be subdued during the day, with no major releases out of the Eurozone or the US. German PPI posted another weak release at -0.1%. There was better news from Eurozone Current Account, which posted a larger surplus than expected.

Eurozone inflation numbers continue to float at anemic levels. On Friday, German PPI posted a decline of -0.1%, unchanged from the previous reading. The index has not managed a gain in 2014. Meanwhile, in an effort to combat deflation in the Eurozone, the ECB announced the results of its first TLTRO on Thursday. This lending program aims to bolster the economy by increasing bank lending to the real economy. The ECB said that the take-up by European banks amounted to 82.3 billion euros, which was well short of estimates that ranged from 100-300 billion. Still, it’s too early to declare the program a failure, and traders and investors will have to wait till the next TLTRO in December before reaching conclusions as to the scheme’s success.

Earlier in the week, EUR/USD fell sharply after the Federal Reserve policy statement. The Fed reaffirmed that interest rates would remain ultra-low for a “considerable time” after its asset purchase scheme (QE) ends next month, but surprised the markets in hinting that once a rate hike was introduced, rate levels could move up more quickly than expected. As expected, the Fed trimmed QE by $10 billion/month, and the remaining $15 billion/month is scheduled to be phased out in October.

The US economy has been improving, but weak inflation levels continue to weigh on economic activity. Earlier this week, CPI, the primary gauge of consumer inflation, came in at -0.2%, its first drop since October. The estimate stood at +0.1%. Core CPI followed suit with a flat reading of 0.0%. This was the first time the index failed to post a gain since October 2010. The weak numbers follow disappointing manufacturing inflation data. PPI, a key event, dipped to just 0.0%, a 3-month low. The estimate stood at 0.1%. Core PPI slipped to 0.1%, down from 0.2% a month earlier. This matched the forecast. Low inflation continues to be a concern and could delay an interest rate hike in 2015.

EUR/USD for Friday, September 19, 2014

EUR/USD September 19 at 9:20 GMT

EUR/USD 1.2885 H: 1.2929 L: 1.2867

EUR/USD Technical

• EUR/USD lost ground late in the Asian session and broke through support at 1.2905. The downward movement has continued in the European session.
• 1.2806 is providing strong support. It has remained firm since July 2013.
• 1.2905 continues to be busy and has reverted to a resistance role. 1.2984 is stronger.
• Current range: 1.2806 to 1.2905

Further levels in both directions:

• Below: 1.2806, 1.2688 and 1.2518 and 1.2353
• Above: 1.2905, 1.2984, 1.3104, 1.3175 and 1.3288

OANDA’s Open Positions Ratio

EUR/USD ratio is pointing to gains in short positions on Friday, reversing the direction see a day earlier. This is consistent with the movement of the pair, as the euro has posted slight losses. The ratio has a majority of long positions, indicative of trader bias towards the euro reversing directions and moving upwards.

EUR/USD Fundamentals

• 6:00 German PPI. Estimate -0.1%. Actual -0.1%.
• 8:00 Eurozone Current Account. Estimate 14.3B. Actual 18.7B.
• 14:00 US CB Leading Index. Estimate 0.4%.

*Key releases are highlighted in bold

*All release times are GMT