EUR/USD Edges Up, Markets Eye ECB Policy Meeting

The euro has edged higher in the Tuesday session, as the pair trades at the 1.09 line. On the release front, it’s another quiet day in the Eurozone, with no major events. In the US, we’ll get a look at two key events. CB Consumer Confidence is expected to improve to 123.7, while New Home Sales is forecast to edge lower to 590 thousand.

The markets breathed a collective sigh of relief late Sunday, as opinion polls accurately forecast the outcome of the French presidential election. The field of 11 candidates in the first round was pared to just 2 candidates. The winners? Centrist Emmanuel Macron and far-right Marie Le Pen. Macron garnered 24% of the vote and Le Pen 22%. The runoff vote takes place on May 7 and French voters couldn’t have a clearer choice as they head back to the polls on Sunday. Macron served as a minister under President Francois Hollande. He favors deregulation and is a staunch supporter of the European Union. Le Pen, who heads the National Front, has campaigned on a ‘France first’ platform, vowing to curb immigration and take France out of the eurozone. Hollande and Francois Fillon, who ran in the first round, have thrown their support behind Macron and asked voters to reject ‘extremism’. Macron is a heavy favorite to win the second round and become president, with polls giving him a comfortable lead of above 60%. Since opinion polls were accurate ahead of the first round of voting, the markets appear to relying on the current polls as well, meaning that a Macron victory has been priced in. Unless this sentiment drastically changes during the week, the election will be a non-event for the market. At the same time, nothing is a sure thing in politics, as underscored by the Brexit vote and the election of Donald Trump, two events which stunned the markets and triggered strong market movement.

French Election: Five Things We Have Learned

Donald Trump has plenty on his plate, but he will have to put in some overtime this week to avoid a shutdown of the federal government on Saturday. Congress must pass a spending bill which will fund the government until October, but the bill requires the backing of 60 senators. This means that the Republicans (who control 52 seats) will need the support of 8 Democrats. This has led to intensive bipartisan negotiations, and it’s reasonable to expect that these talks could go down to the wire, as both sides try to stick to their positions and try not to blink first. The last shutdown was in 2013, lasting 17 days. Another shutdown would be embarrassing for Trump, as it would start on his 100th day in office and would cast doubts on his ability to push his budget and tax plan through Congress.

EUR/USD Fundamentals

Tuesday (April 25)

  • 9:00 Belgian NBB Business Climate. Estimate -1.4
  • 9:00 US HPI. Estimate 0.1%
  • 9:00 US S&P/CS Composite-20 HPI. Estimate 5.7%
  • 10:00 US CB Consumer Confidence. Estimate 123.7
  • 10:00 US New Home Sales. Estimate 590K
  • 10:00 US Richmond Manufacturing Index. Estimate 18

*All release times are EST

*Key events are in bold

EUR/USD for Tuesday, April 25, 2017

EUR/USD April 25 at 5:30 EST

Open: 1.0865 High: 1.0899 Low: 1.0851 Close: 1.0896

EUR/USD Technical

S1 S2 S1 R1 R2 R3
1.0616 1.0708 1.0873 1.0985 1.1122 1.1242

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

  • 1.0873 has switched to a support role. It is a weak line
  • 1.0985 is the next line of resistance

Further levels in both directions:

  • Below: 1.0873, 1.0708, 1.0616 and 1.0506
  • Above: 1.0985, 1.1122 and 1.1242
  • Current range: 1.0873 to 1.0985

OANDA’s Open Positions Ratio

EUR/USD ratio is showing little movement in the Tuesday session. Currently, short positions have a solid majority (62%), indicative of the EUR/USD reversing directions and moving 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.