EUR/USD is steady on Wednesday, in what has been an uneventful week for the pair up to now, despite the continuing crisis in the Ukraine. Today’s highlight is the Federal Reserve’s policy statement, with another trim to QE widely expected. In the Eurozone, today’s sole release is the German 10-year bond auction.
Will we see another QE trim on Wednesday? The US Federal Reserve concludes its policy meeting on Wednesday, its first meeting under the tutelage of Janet Yellen. Recent US numbers haven’t dazzled, but they should be strong enough for the Federal Reserve to go ahead with another taper of QE. This would be the third trim of the Fed’s asset-buying scheme, and would reduce QE to $55 billion per month. These tapers are dollar-positive and mark a vote of confidence in the US economy by the Fed, so a taper could give the US a push upwards.
Events are moving fast in the Ukrainian crisis. Voters in Crimea voted overwhelmingly to join Russia in a referendum on Sunday. The next day, Russian Prime Minister Putin formally recognized Crimea as an independent state, paving the way for annexation. The EU and US have slapped targeted sanctions against high-ranking Russian officials, and Western leaders plan to meet during the week to discuss a united strategy to respond to the crisis. So far, the currency markets have not reacted to the events in Ukraine, but that could change if the crisis deteriorates.
Eurozone and German Economic Sentiment tumbled on Tuesday. The German release slipped to 46.6 points, its lowest level in seven months. This was short of the estimate of 52.8 points. Eurozone Economic Sentiment continues to tail off, dropping to 61.5 points, down sharply from 61.5 points. This was way off the estimate of 67.3 points. The indicators, which are based on a survey of institutional investors and analysts, are important gauges of confidence in the economy.
The European Stability Mechanism, which is the Eurozone’s bailout fund, was confirmed as legal by the German Federal Constitutional Court on Tuesday. Germany is the biggest contributor to the EUR 970 billion fund. In February, the court deferred a decision on the Outright Monetary Transactions, which is credited with saving weak members of the Eurozone, to the European Court of Justice.
EUR/USD for Wednesday, March 19, 2014
EUR/USD March 19 at 12:25 GMT
EUR/USD 1.3924 H: 1.3933 L: 1.3905
- EUR/USD is showing little movement in Wednesday trade. The pair continues to stay close to the 1.39 line.
- The round number of 1.40, a key level, is providing resistance. The next line of resistance is at 1.4149.
- 1.3893 continues to provide support, but is a weak line. There is stronger support at 1.3786.
- Current range: 1.3893 to 1.4000
Further levels in both directions:
- Below: 1.3893, 1.3786, 1.3649, 1.3585 and 1.3410
- Above: 1.4000, 1.4149, 1.4307 and 1.4397
OANDA’s Open Positions Ratio
EUR/USD ratio is almost unchanged on Wednesday, showing little movement for a second straight day. This is consistent with what we’re seeing from the pair, which is showing little activity. Short positions retain a strong majority, indicative of trader bias towards the dollar moving higher.
The euro continues to trade close to the 1.39 line. The euro has edged higher in the European session.
- 10:43 German 10-year Bond Auction. Actual 1.58%.
- 12:30 US Current Account. Exp. -88B. Actual -81B.
- 14:30 US Crude Oil Inventories. Exp. 2.4M.
- 18:00 US FOMC Economic Projections.
- 18:00 US FOMC Statement.
- 18:00 US Federal Funds Rate.
- 18:30 US FOMC Press Conference.
*Key releases are highlighted in bold
*All release times are GMT
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.