EUR/USD – Euro Steady Ahead of ECB Minutes

EUR/USD continues to show little movement this week and this pattern has continued in the Thursday session. Currently, the pair is trading at 1.0660. On the release front, German Factory Orders rebounded in February with a gain of 3.5%, close to the forecast of 3.4%. The ECB will release the minutes from its March policy meeting and ECB President Mario Draghi will speak at a conference in Frankfurt. In the US, today’s highlight is unemployment claims, which is expected to drop to 251 thousand. On Friday, the US releases Nonfarm Employment Change, which is expected to drop sharply to 174 thousand. We’ll also get a look at wage growth and the unemployment rate.

German and Eurozone PMI reports, which are important gauges of the economy, looked solid in March. Manufacturing PMIs posted to expansion, and Services PMIs followed suit. German Services PMI climbed to a 15-month high, while Eurozone Services PMI jumped to a 71-month high, although it missed expectations. The euro shrugged off these strong numbers, as it continues to have an uneventful week. EUR/USD dropped 1.9 percent last week, marking its worst weekly decline since November 2016. The ECB will release the minutes of its March meeting, at which the central bank made no changes to interest rates or its asset purchase program. Although inflation levels have improved to their highest levels in years, they remain below the ECB target of 2.0%, so the central bank still has some breathing room and isn’t under immediate pressure to tighten monetary policy. The ECB’s asset purchase program of EUR 60 billion/mth is scheduled to expire in December. Any surprises from the minutes could have a strong impact on the movement of the euro.

The Federal Reserve released the minutes of its March policy meeting on Wednesday. At the meeting, the Fed raised rates a quarter-point to 0.75%, but the dovish rate statement disappointed the markets, triggering broad losses for the US dollar. In the minutes, policymakers noted upside risk to the US economy, but remained divided on whether inflation will rise to the Fed target of 2.0%. Most policymakers were in favor of taking steps to trim the $4.5 trillion balance sheet, which has ballooned since the Fed implemented its aggressive quantitative easing program back in 2008. So what’s next for the Fed? According to the CME’s Fed Watch, the odds of a rate hike at the May meeting are just 5 percent, while the likelihood of a rate hike in June stand at 63 percent.

Fed Minutes Show a Divided Central Bank on Trump and Inflation

EUR/USD Fundamentals

Thursday (April 6)

  • 2:00 German Factory Orders. Estimate 3.5%. Actual 3.4%
  • 3:00 ECB President Mario Draghi Speech
  • 4:10 Eurozone Retail PMI. Estimate 49.5
  • 4:48 Spanish 10-y Bond Auction. Estimate 1.61%
  • Tentative – French 10-y Bond Auction
  • 5:40 German Buba President Jens Weidmann Speech
  • 7:30 ECB Monetary Policy Meeting Accounts
  • 7:30 US Challenger Job Cuts
  • 8:30 US Unemployment Claims. Actual 251K
  • 10:30 US Natural Gas Storage. Estimate 10B

Upcoming Key Events

Friday (April 7)

  • 8:30 US Average Hourly Earnings. Estimate 0.2%
  • 8:30 US Nonfarm Employment Change. Estimate 174K
  • 8:30 US Unemployment Rate. Estimate 4.7%

*All release times are EST

*Key events are in bold

EUR/USD for Thursday, April 6, 2017

EUR/USD April 6 at 6:15 EST

Open: 1.0672 High: 1.0684 Low: 1.0628 Close: 1.0664

EUR/USD Technical

S1 S2 S1 R1 R2 R3
1.0340 1.0506 1.0616 1.0708 1.0873 1.0985

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

  • 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 unchanged in the Thursday session. Currently, long positions have a majority (54%), indicative of trader bias towards EUR/USD breaking out 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.

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.