EUR/USD – Euro Subdued, US Consumer Confidence Next

EUR/USD is almost unchanged on Tuesday, as the pair trades at 1.0860. On the release front, there are no eurozone events. In the US, today’s highlight is CB Consumer Confidence, which is expected to dip to 113.9 points.

The improving euro punched above the 1.09 level on Monday, its highest level since November 2016. The currency was boosted by an excellent reading from German Ifo Business Climate, which rose to 112. 3 points. This marked its highest level since July 2011. The release underscores high optimism in the business sector, despite rumblings of protectionism from the US and the uncertainty in Europe over the imminent Brexit negotiations. Germany, the largest economy in Europe, continues to post strong numbers, which has been good news for the eurozone economy. Last week’s PMIs pointed to expansion in the manufacturing and service sectors. German and eurozone Manufacturing PMIs both beat their estimates and hit their highest levels since 2011. Later this week, Germany releases key indicators, including CPI, retail sales and unemployment claims. One soft spot in the economy, however, is consumer confidence. GfK German Consumer Climate lost ground for a second straight month, as the indicator dropped to 9.8 in March, its lowest level since November 2016. Eurozone Consumer Confidence remains weak, as the indicator posted a decline of -5 in March, almost unchanged from a month earlier. These soft numbers are largely a result of higher inflation, as consumers are concerned about their reduced purchasing power. If inflation levels head higher, consumers could respond by curtailing spending, which could hamper economic growth.

Donald Trump suffered his first major setback as president last week, as his bill to replace the Affordable Care Act was pulled before it even went to a vote. Trump is used to giving the orders in the private sector and on reality TV, but he didn’t get his way on healthcare, despite the Republicans enjoying a majority in Congress. This bruising defeat has sent the US dollar sharply lower, and sent market jitters higher. Trump’s administration has stumbled out of the starting gate, and after more than two months in office, he has yet to provide any details over even an outline of economic policy. The inquiry into the Trump administration’s links with Russia is gathering steam, and is another cause for concern for nervous investors. Trump has said he will now focus on tax reform, but he has his work cut out, trying to convince a skeptical Congress and general public that he can deliver the goods and pass new, effective legislation.

Week Ahead Trump Administration Fails with Healthcare Bill

Trump Not Just Pointing the Finger at Democrats Over Healthcare Bill Failure

EUR/USD Fundamentals

Tuesday (March 28)

  • 8:30 US Goods Trade Balance. Estimate -66.6B
  • 8:30 US Preliminary Wholesale Inventories. Estimate 0.2%
  • 9:00 US S&P/CS Composite-20 HPI. Estimate 5.7%
  • 10:00 US CB Consumer Confidence. Estimate 113.9
  • 10:00 US Richmond Manufacturing Index. Estimate 16
  • 13:00 US FOMC Member Robert Kaplan Speech

Upcoming Key Events

Wednesday (March 29)

  • 10:00 US Pending Home Sales. Estimate 2.3%

*All release times are EST

*Key events are in bold

EUR/USD for Tuesday, March 28, 2017

EUR/USD March 28 at 5:20 EST

Open: 1.0861 High: 1.0872 Low: 1.0845 Close: 1.0860

EUR/USD Technical

S1 S2 S1 R1 R2 R3
1.0506 1.0616 1.0708 1.0873 1.0985 1.1097

EUR/USD was flat in the Asian session and has ticked lower in European trade

  • 1.0708 continues to provide support
  • 1.0873 is a weak resistance line and could be tested during the Tuesday session

Further levels in both directions:

  • Below: 1.0708, 1.0616 and 1.0506
  • Above: 1.0873, 1.0985 and 1.1097
  • Current range: 1.0708 to 1.0873

OANDA’s Open Positions Ratio

EUR/USD ratio is unchanged in the Tuesday session. Currently, short positions have a strong majority (62%), indicative of trader bias towards EUR/USD continuing to move lower.

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.