Yahoo Finance EUR/USD Daily Technical Analysis for December 14, 2017
The EUR/USD continued to consolidate ahead of the FED and the ECB this week. The Fed is widely expected to increase rates by 25 basis points while the ECB is expected to remain steadfast. German inflation was confirmed with a gain relative to the prior month, while U.S. CPI missed expectations. Eurozone Industrial Production rose more than expected while employment in the same region increased.
Technicals
The EUR/USD was nearly unchanged making an inside day which is a lower high and a higher low which reflects indecision. Supports is seen near an upward sloping trend line that comes in near 1.1650. Resistance is seen near the 10-day moving average at 1.1811. Momentum remains negative as the MACD (moving average convergence divergence) histogram prints in the red with a downward sloping trajectory which points to a lower exchange rate.
German November Inflation Increased from October
German November HICP inflation was confirmed at 1.8% year over year, as expected and up from 1.5% year over year in the previous month. The breakdown confirmed that the main driver behind the uptick was a rebound in energy price inflation, with petrol prices rising 2.6% month over month, bringing the annual rate up to 5.9% from 1.2%. Heating oil prices also surged and while the German headline rate now is pretty much in line with the ECB’s objective, Draghi can still refer to the transitory impact of energy prices and still wage growth when he defends his very expansionary policy. More importantly perhaps, the German rate is above the Eurozone rate and as there hasn’t been much progress with regard to economic convergence since the crisis, stronger countries such as Germany may have to be forced to live with a period of above target inflation to give the weaker countries more time to catch up.
Eurozone Employment Rose
Eurozone employment rose 0.4% quarter over quarter in Q3, bringing the annual rate to 1.7% year over year from 1.6% year over year in Q2. Further signs that the Eurozone recovery has reached the labor market with not only unemployment coming down, but employment growth also strengthening.
Eurozone Industrial Production Was Solid
Eurozone October industrial production stronger than expected at 0.2% month over month, bringing the annual rate up to 3.7% year over year from 3.4% year over year in the previous month. National data was mixed in October, with German production underperforming in the September/October period, but the fact that the Eurozone number still picked up highlights that the Eurozone recovery is increasingly broad based. The three months trend growth rate stayed at a healthy 1.2% and with companies reporting capacity constraints the data will add to the arguments of those at the ECB pushing for Draghi to commit to an end date for QE.
Italian Industrial Production Rebounded
Italian industrial production rebounded in October, rising 0.5% month over month, after a drop of -1.3% month over month in the previous month. This brought the working day adjusted annual rate to a healthy 3.1% year over year, from 2.2% year over year in September. A solid start to the fourth quarter and the improvement in annual rates shows that the Eurozone recovery is broadening, although trend growth remains low and for Draghi and the doves at the ECB the recovery is not sufficiently strong in the weaker countries to end net-asset purchases, especially as unemployment rates remain high.
U.S. CPI Rose
U.S. CPI rose 0.4% in November with the core rate 0.1% higher. There were no revisions to October where the headline rate rose 0.1% and the ex-food and energy component was up 0.2%. On an annual basis, CPI accelerated to 2.2% year over year from 2.0% year over year. But the core rate slowed to 1.7% year over year versus 1.8% year over year. A 3.9% surge in energy prices was the culprit behind the strength in the headline gain and more than reversed the 1.0% October decline. Transportation costs were also firm, posting a 1.9% gain versus -0.5%. Prices across the rest of the report were rather tame. Housing costs edged up 0.2%. Services prices were up 0.2%. Meanwhile, food prices were unchanged. Medical care was also flat. Apparel prices declined 1.3%.
This article was originally posted on FX Empire
