Yahoo Finance EUR/USD Daily Technical Analysis for December 13, 2017
The EUR/USD moved lower as softer than expected German investors confidence combined with stronger than expected U.S. inflation data gave a boost to the greenback and weighed on the Euro. U.S. small business confidence was also strong along with U.S. chain store sales.
Technicals
The EUR/USD moved lower on Tuesday initially moving higher testing resistance near the 10-day moving average at 1.1819. Support on the currency pair is seen near an upward sloping trend line that comes in near 1.1675. Prices are forming a topping pattern, as traders await the Fed decision where the central bank is widely expected to hike interest rates in the United States by 25-basis points. Momentum has recently turned negative as the MACD (moving average convergence divergence) index generated a crossover sell signal. The MACD histogram is printing in the red with a downward sloping trajectory which points to a lower exchange rate.
German Zew Investor Confidence Contracted in December
German ZEW investor confidence fell back to 17.4 in December, from 18.7 in the previous month. The decline was more than anticipated, and effectively reversed the improvements of the last two months, leaving the headline number at the lowest reading since September. The current conditions indicator still improved as did the three months trend rate and at 17.4 the ZEW still suggests that optimists far outnumber pessimists. Still it is below the long-term average and after the weak production numbers from September/October, some jitters also in the forward looking indicators now casting some shadow over the still very strong German and Eurozone growth outlooks that will reduce the pressure on Draghi to finally commit to an end date for QE.
German political wrangling didn’t have significant impact. While it is tempting to put down the dip in ZEW investor confidence to the political uncertainty and the failure of the first round of coalition talks survey compiler ZEW, which did a separate survey on the political situation in Germany, said this didn’t have much of an impact on economic expectations, but found that investors did expect an impact on the future of Brexit talks and upcoming EU reforms.
German economy to show strong result this year
The latest monthly report from Germany’s Economy Ministry sounded upbeat, saying that order intake and sentiment indicators send “positive signals”, that suggest a rebound in production numbers after weak results for September and October. At the same time the report notes that consumers’ willingness to buy as well as retail sentiment remain positive, as unemployment as well as underemployment declines, although the Ministry admits that there are still “structural challenges” in the labor market. We agree with the overall optimistic assessment, although structural problems, not just in the labor market, but also with regard to public investment remain and with the government still in limbo there is not much hope that these will be addressed quickly.
U.S. November NFIB Index Surged
U.S. November NFIB small business optimism index surged 3.6% to 107.5 after bouncing 0.8% in October to 103.8. The November reading is the highest since 1983 and is the second best in the 44-year history of the report, bested only by the 108.0 from September 1983. The index jumped last November to 98.4 after the election, from 94.9 and has been in historically high territory ever since. Plans to hire increased with 24% of the firms reporting such, versus 18% previously. Firms looking to boost capital spending dipped to 26% from 27%, however.
U.S. Chain Store Sales Jumped
U.S. chain store sales jumped 3.2% to 115.1 in the week of December 9, which nearly recovers much of the prior week’s 4.0% decline. The annual pace slowed a bit, however, to 3.1% year over year versus 3.7% year over year previously. The report noted consumer are completing their holiday shopping at a slower clip than last year, and at the same or slower rate than the longer-term trend, and that could result in a last-minute frenzy. Expectations are for the strongest holiday season since 2014.
U.S. Producer Prices Increased in November
The U.S. producer price index increased by 0.4% in November according to the Department of Labor, advancing by the same margin for three straight months. Expectations were for PPI to increased on a headline basis by 0.3%. In the 12 months through November, the PPI shot up 3.1%. That was the biggest gain since January 2012 and followed a 2.8% rise in October. Core PPI increased by 0.2% in November, and rose 2.4% year over year.
This article was originally posted on FX Empire
