EUR/USD – Euro Flat as Markets Await Fed Statement

The euro is showing little movement on Wednesday, as EUR/USD trades in the mid-1.13 range in the European session. On the release front, GfK German Consumer Climate continues to rise and met expectations. In the US, the markets are keeping a close eye on the FOMC Statement, which will be released later in the day.

The Federal Reserve will be in the spotlight on Wednesday, with the release of a policy statement at the end of a two-day meeting. The Fed is expected to continue to counsel patience regarding an interest rate hike, and persistently weak inflation means the Fed can take its time before having to make a monetary move. The markets will be combing through the statement and any clues as to the timing of rate hike could shake up a listless EUR/USD.

It’s been a strong week for German confidence indicators. GfK German Consumer Climate improved to 9.3 points, edging above the estimate of 9.2 points. The key indicator has now risen for four consecutive releases, as the German consumer remains optimism. This follows an excellent business confidence report. German Ifo Business Climate rose for a fourth straight month, hitting 106.7 points which matched the estimate. This marked a six-month high.

Tuesday was a busy day in the US. Durable Good reports disappointed, as Durable Goods Orders plunged 3.4%, marking a 4-month low. There was no relief from Core Durable Goods Orders, which declined by 0.8%, its fifth drop in six readings. The markets had expected gains from both indicators. There was much better news later in the day, as CB Consumer Confidence jumped to 102.9 points, crushing the estimate of 95.3 points. New Home Sales followed suit, rising to 481 thousand, well above the forecast of 452 thousand.

Greece remains in the headlines, as voters gave a sweeping mandate to the far-left Syriza party. Syriza ran on a platform of ending the crushing austerity scheme which Greeks have endured as part of the €240 billion bailout negotiated between and the EU, ECB and IMF. Syriza’s win certainly throws a monkey wrench into the Greek bailout program, but the new Greek government is likely to negotiate a deal with Greece’s creditors. A Greek exit from the Eurozone a most unlikely scenario. Indeed, Greek Prime Minister-elect Alexis Tsipras has promised to keep Greece in the Eurozone. Still, there remains plenty of uncertainty as to what will happen with the bailout plan, so traders can expect events in Athens to have a strong impact on the movement of the euro.

EUR/USD for Wednesday, January 28, 2015

EUR/USD January 28 at 12:10 GMT

EUR/USD 1.1365 H: 1.1382 L: 1.1326

EUR/USD Technical

• EUR/USD was flat in the Asian session. The pair tested support at 1.1340 earlier in the European session.
• 1.1340 remains under pressure. 1.1231 is stronger.
• 1.1426 is an immediate resistance line.
• Current range: 1.1340 to 1.1426

Further levels in both directions:

• Below: 1.1340, 1.1231, 1.1154, 1.1066 and 1.0906
• Above: 1.1426, 1.1525, 1.1634 and 1.1754

OANDA’s Open Positions Ratio

EUR/USD ratio is almost unchanged on Wednesday. This is consistent with the lack of movement we’re seeing from the pair. The ratio currently has a majority of short positions, indicative of trader bias towards the euro moving lower.

EUR/USD Fundamentals

• 7:00 GfK German Consumer Climate. Estimate 9.2 points. Actual 9.3 points.
• 7:00 German Import Prices. Estimate -1.4%. Actual -1.7%.
• 10:34 German 30-year Bond Auction. Actual 1.07%.
• 15:30 US Crude Oil Inventories. Estimate 4.2M.
• 19:00 US FOMC Statement.
• 19:00 US Federal Funds Rate. Estimate <0.25%

*Key releases are highlighted in bold

*All release times are GMT

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