EUR/USD Daily Technical Analysis for September 20, 2017
The EUR/USD edged slightly higher on Tuesday but continued to consolidate ahead of the Federal Reserve meeting scheduled to conclude on Thursday. The German Zew Investor confidence rose which helped buoy the currency pair, but traders are focused on the Fed and if they will mention quantitative tightening when they convene. U.S. import prices surged higher, rising more than 2% year over year.
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The EUR/USD continued to hug the 10-day moving average, and consolidate ahead of the Fed meeting on Thursday. Support on the exchange rate is seen near last week’s lows at 1.1834, while resistance is seen near last week’s highs at 1.2092. Prices appear to be forming a bull flag pattern which is a pause that refreshes higher. Negative momentum is decelerating as the MACD (moving average convergence divergence) histogram is printing in the red with an upward sloping trajectory which points to consolidation.
The Eurozone Current Account Surplus Widened in July
Eurozone current account surplus widened to EUR 25.1 billion in July, from EUR 22.8 billion in the previous month. The trade surplus narrowed, the services surplus was pretty much unchanged, but the primary income revenue expanded sharply. The unadjusted financial account showed direct and portfolio inflows of EUR 23.1 billion, up from EUR 5.5 billion in the previous month, bringing the total for the year to July to EUR 493.5 billion, down from EUR 560.9 billion in the first seven months last year. The unadjusted current account surplus in the period to July this year amounted to EUR 338.5 billion, down from EUR 373.4 billion in the corresponding period last year.
German Zew Investor Confidence Rebounded in September
German ZEW investor confidence jumped to 17.0 from 10.0 in the previous month. Expectations had been for an improvement given the stabilization in stock markets, but in the event the rise turned out to be more pronounced than anticipated and the current conditions indicator also improved to 87.9 from 86.7 in August. The bounce back in the September reading is encouraging, although it still didn’t bring the reading back to levels seen in July and all in all the numbers confirm that the German recovery remains on track, but also that growth dynamics in the second half of the year are likely to be slightly lower than in the first half.
U.S. Housing Starts Stabilize
U.S housing starts dipped 0.8% to 1.180 million in August after falling 2.2% to 1.190 million in July which was revised from 1.155 million. Multi-family starts remained weak, falling 6.5% after declining 2.2% previously which was revised from -15.3%. Single family starts rebounded 1.6% after slipping 2.2% in July which was revised from -0.5%. Housing completions dropped 10.2% following the prior 2.7% decline which was revised from -6.2%. Building permits increased 5.7% to 1.300 million after falling 3.5% to 1.230 million which was revised from 1.223 million. The data collection from Texas and Florida areas affected by the hurricanes, according to the report.
U.S. Imports Surge Higher
U.S. import and export prices rose 0.6% in August. The 0.1% import price gain in July was revised down to -0.1%, while the 0.4% rise in export prices was nudged up to 0.5%. On a year over year basis, import prices surged to a 2.1% year over year pace versus 1.2% year over year previously. The 12-month export price index climbed to a 2.3% year over year rate from 0.9% year over year which was revised from 0.8% year over year. In terms of month import prices, petroleum led the strength, jumping 4.8%, breaking a string of declines going back to early in the year. Excluding petroleum, import prices were 0.3% higher versus -0.1% previously which was revised from unchanged. Foods, beverage prices rose 0.3%. Import prices with China were flat from 0.1%. As for export prices, agricultural prices were up 0.1% after rebounding 1.9% in July which was revised from 2.1%. Excluding ag, export prices were up 0.7% versus 0.3% previously.
U.S. Q2 current account deficit widened to -$123.1 billion from -$113.5 billion in Q1 which was revised from -$116.8 billion and Q4’s -$114.0 billion. The balance on goods and services narrowed to -$137.3 billion from Q1’s -$138.1 billion which was revised from -$139.0 billion. The primary income balance was $47.2 from $50.1 billion which was revised from $47.7 billion. The balance on secondary income was -$33.0 billion versus -$25.5 billion.