EUR/USD – Euro Under Pressure, Retail Sales Next

EUR/USD has edged lower in the Tuesday session. Currently, the pair is trading at 1.0660. On the release front, the eurozone will release retail sales, which is forecast to post a gain of 0.5% after three straight declines. ECB President Mario Draghi will speak in Frankfurt, as the ECB launches its new EUR 50 banknote. In the US, today’s highlight is trade balance, which the trade deficit expected to narrow to $46.0 billion. On Wednesday, all eyes will be on the Federal Reserve, which will publish the minutes of its March policy meeting. As well, the US will release ADP Employment Change and ISM Non-Manufacturing PMI.

The euro remains under pressure, as the currency hovers close to 3-week lows. EUR/USD dropped 1.9 percent last week, marking its worst weekly decline since November 2016. Soft inflation numbers late in the week disappointed the markets and soured sentiment on the continental currency. German Preliminary CPI posted a weak gain of 0.2%, short of the forecast of 0.4%. This was followed by Eurozone Flash CPI Estimate, which slipped to 1.5%, missing the forecast of 1.8%. At the same time, Germany, the largest economy in Europe, continues to post solid numbers. Employment and retail sales data in February beat expectations, as the German economy continues to expand at a healthy clip in 2017.

The US economy hasn’t missed a beat in 2017, and the markets are expecting strong data for the first quarter. The CB consumer confidence report soared to 125.6 in March, and strong consumer confidence levels should translate into increased consumer spending, a key component of economic growth. GDP for the fourth quarter was revised to 2.1%, up from 1.9% in the previous GDP report. With the economy headed in the right direction, the discussions around the monetary policy tables are not whether the Fed will raise rates, but whether will it press the rate trigger two or three more times in 2017. The markets will be paying close attention to the minutes of the March meeting, when the Fed raised rates by a quarter-point, to a range of 0.75-1.00%. Any hints about the timing of the next hike, as well as the tone of the minutes are factors which could move the currency markets on Wednesday. The markets considered the rate statement overly cautious, and this sentiment sent the US dollar broadly lower. If the reaction to the minutes is one of disappointment, the dollar could again head downwards.

EUR/USD Fundamentals

Tuesday (April 4)

• 3:00 Spanish Unemployment Change. Estimate -41.2K. Actual -48.6K
• 5:00 Eurozone Retail Sales. Estimate 0.5%.
• 8:30 US Trade Balance. Estimate -46.0B
• 10:00 US Factory Orders. Estimate 1.0%
• 10:00 US IBD/TIPP Economic Optimism. Estimate 53.2
• 10:30 ECB President Mario Draghi Speech
• 4:30 US FOMC Member Daniel Tarullo Speech

Upcoming Key Events

Wednesday (April 5)

• 8:15 US ADP Nonfarm Employment Change. Estimate 191K
• 10:00 US ISM Non-Manufacturing PMI. Estimate 57.1
• 14:00 US FOMC Meeting Minutes

*All release times are EST

*Key events are in bold

EUR/USD for Tuesday, April 4, 2017

EUR/USD April 4 at 4:50 EST

Open: 1.0670 High: 1.0675 Low: 1.0644 Close: 1.0658

EUR/USD Technical

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

• 1.0616 is providing support
• 1.0708 is the next resistance line

Further levels in both directions:

• Below: 1.0616, 1.0506 and 1.0340
• Above: 1.0708, 1.0873, 1.0985 and 1.1097
• Current range: 1.0616 to 1.0708

OANDA’s Open Positions Ratio

EUR/USD ratio is showing gains in long positions session. Currently, long positions have a majority (54%), indicative of trader bias towards EUR/USD reversing directions and moving upwards.

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.