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EUR/USD Unfazed as Eurozone Economic Sentiment Edges Higher

EUR/USD Unfazed as Eurozone Economic Sentiment Edges Higher

Oded Shimoni, Junior Currency Analyst

Talking Points:

- The Euro was little changed versus the US Dollar

- Eurozone economic sentiment prints 104.7 vs 104.4 expected

- Marked improvements in confidence in the retail trade and construction sectors

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The Euro was little changed versus the US Dollar (at the time this report was written) after today's Eurozone economic confidence figures came above expectations. The Economic Sentiment Indicator rose to 104.7, above the expected 104.4 figure, and the revised prior reading of 104.0.

The index is compiled from five different indicator surveys including: industrial, services, consumer, retail, and construction.

The report said that the increase in euro-area sentiment resulted from marked improvements in confidence in the retail trade and construction sectors, while confidence remained stable in industry and decreased slightly in the services sector.

Sentiment in the services sector decreased to 11.3 in May from the prior revised 11.7, but was in line with expectations.

Measures for industrial confidence was unchanged at -3.6, which was below expectations for a slight improvement to -3.5. The report said positive assessments of the current level of overall order books and stocks of finished products was offset by a marked decrease in production expectations.

The ECB Governing Council set to meet June 2 and announce the bank’s rate decision. The central bank will also present updated forecasts. In this context, it might be interesting to point out that selling price expectations increased markedly in industry and services, along with consumer inflation expectation which printed 3.4 vs 2.9 prior.

Higher price pressures may be seen as a positive for the ECB, as the central bank's stimulus efforts has thus far failed to meet the inflation target of close to, but below, 2% inflation.

As was mentioned today by DailyFX Currency Strategist Ilya Spivak, considering the limited outcomes of such reports on near-term ECB policy, the Euro seemed unfazed by the figures and was little changed versus the US Dollar.

The DailyFX Speculative Sentiment Index (SSI) is showing that about 52.4% of traders are long the EUR/USD. You can find more info about the DailyFX SSI indicator here.

EUR/USD 5-Minute Chart: May 30, 2016

--- Written by Oded Shimoni, DailyFX Research

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.