EUR/USD – Euro Inches Lower, Markets Eye ECB Meeting

EUR/USD has ticked lower in the Wednesday session. Currently, the pair is trading at 1.0550. On the release front, German Industrial Production rebounded with a strong gain of 2.8%. Later in the day, the US releases ADP Nonfarm Employment Change, ahead of the official Nonfarm Payrolls report on Friday. On Thursday, the ECB will set the benchmark rate, while the US releases unemployment claims.

After some solid data last week, German numbers are mixed this week. Industrial Production gained 2.8%, its strongest gain since January 2016. Factory Orders plunged 7.4% in February, much worse than expected. Retail sales, the primary gauge of consumer spending, declined 0.8%, compared to an estimate of 0.2%. This marked a fifth decline of six releases, as the German consumer continues to hold tight to her purse strings. If data from Germany, the Eurozone’s largest economy, continues to point downwards, investors could get edgy and drag the euro south towards the 1.05 level.

Almost lost in the anticipation of a March move by the Federal Reserve, the ECB will hold its policy meeting on Thursday. The benchmark rate has been pegged at 0.00% since March 2016, and no change is expected at the upcoming meeting. Inflation levels have moved higher and Eurozone inflation is expected at 2.0% in February, meeting the central bank’s inflation target. ECB President Mario Draghi appears comfortable with current monetary policy, although the ECB could tighten its stance if growth and inflation levels continue to point upwards.

Donald Trump and his new administration continues to create controversy on an almost basis, much to the consternation of the markets. Still, the dollar hasn’t skipped a beat and remains at high levels against its major rivals, including the euro. The dollar has benefited from a strong economy and the increasing likelihood of a rate hike at the upcoming Fed policy meeting on March 15. The likelihood of a March hike has jumped to 84%, according to the CME group, compared to 33% just a week ago. The US will kick off a host of employment indicators this week, starting with the ADP Nonfarm Payrolls on Wednesday. These job numbers will be critically important, as strong numbers will likely boost the odds of a March move as well as push the greenback to higher levels.

French Political Risk Simmers Again

Are Red Flags Appearing in the USD Rally?

Fed March Rate Hike Already Priced in as Markets Await ADP Payrolls

 

EUR/USD Fundamentals

Wednesday (March 8)

  • 2:00 German Industrial Production. Actual 2.8%
  • 2:45 French Trade Balance. Estimate -3.7B. Actual -7.9B
  • 8:15 US ADP Nonfarm Employment Change. Estimate 184K
  • 8:30 US Revised Nonfarm Productivity. Estimate 1.5%
  • 8:30 US Revised Unit Labor Costs. Estimate 1.6%
  • 10:00 US Final Wholesale Inventories. Estimate -0.1%
  • 10:30 US Crude Oil Inventories. Estimate 1.1M
  • 13:01 US 10-y Bond Auction

Thursday (March 9)

  • 7:45 ECB Minimum Bid Rate. Estimate 0.00%
  • 8:30 ECB Press Conference
  • 8:30 US Unemployment Claims. Estimate 239K

*All release times are EST

*Key events are in bold

 

EUR/USD for Wednesday, March 8, 2017

EUR/USD March 8 at 5:45 EST

Open: 1.0569 High: 1.0574 Low: 1.0546 Close: 1.0555

 

EUR/USD Technical

S1 S2 S1 R1 R2 R3
1.0333 1.0414 1.0506 1.0616 1.0708 1.0873

EUR/USD has been flat in the Asian and European sessions

  • 1.0506 is providing support
  • 1.0616 is the next resistance line

Further levels in both directions:

  • Below: 1.0506, 1.0414 and 1.0333
  • Above: 1.0616, 1.0708, 1.0873 and 1.0985
  • Current range: 1.0506 to 1.0616

OANDA’s Open Positions Ratio

EUR/USD ratio is almost unchanged this week. Currently, long positions have a slender majority (52%), indicative of a slight bias towards EUR/USD reversing directions and moving higher.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Kenny Fisher

Kenny Fisher

Currency Analyst at Market Pulse
Kenny Fisher joined OANDA in 2012 as a Currency Analyst. Kenny writes a daily column about current economic and political developments affecting the major currency pairs, with a focus on fundamental analysis. Kenny began his career in forex at Bendix Foreign Exchange in Toronto, where he worked as a Corporate Account Manager for over seven years.