EUR/USD – Listless as Markets Await ECB Statement

EUR/USD is showing little movement on Thursday, as the pair slightly above the 1.16 line in the European session. The markets are anxiously awaiting the ECB policy meeting later today, with the ECB widely expected to announce a QE program. There is also concern about the Greek elections on Sunday, as the Syriza party, which has promised to tear up Greece’s bailout agreement, leads in the polls. In the US, today’s highlight is Unemployment Claims, with the indicator expected to dip to 301 thousand.

As the markets nervously eye the ECB policy meeting later on Thursday, is the euro’s inactivity the calm before the storm? It appears that the ECB will flash its trump card and implement a QE program. However, now that a QE is likely priced in, the question remains what will be the size of the program? The markets are anticipating QE of between EUR 500-600 billion, but some market players are saying that the ECB could go as high as EUR 800 billion. There’s a strong chance that the euro could take a hit after the ECB statement, unless the ECB surprises with a “QE lite”, such as EUR 300 billion, which would be well below expectations.

There was excellent news out of Germany on Wednesday, as ZEW Economic Sentiment climbed to 48.4 points, crushing the estimate of 40.1 points. This marked the indicator’s highest level in 11 months, pointing to strong optimism among German investors and analysts. Eurozone Economic Sentiment, improving to 45.2 points. This easily surpassed the forecast of 37.6 points. The news was not as positive on the inflation front, as German PPI dropped 0.7%, its worst showing since April 2009. With the Eurozone struggling with deflation, there is growing expectation that the ECB will announce a QE package at its policy meeting later on Thursday.

EUR/USD for Thursday, January 22, 2015

EUR/USD January 22 at 11:35 GMT

EUR/USD 1.1631 H: 1.1638 L: 1.1576

EUR/USD Technical

• EUR/USD has shown little movement in the Asian or European sessions. The pair has tested resistance at the 1.1634 line.
• 1.1525 is an immediate support level.
• On the upside, 1.1634 is under strong pressure. 1.1734 is stronger.
• Current range: 1.1525 to 1.1634

Further levels in both directions:

• Below: 1.1525, 1.1426, 1.1340 and 1.1154
• Above: 1.1634, 1.1734, 1.1802, 1.1926 and 1.2042

OANDA’s Open Positions Ratio

EUR/USD ratio is unchanged on Thursday, continuing the trend which has marked the ratio all week. This is consistent with the lack of the movement from the pair. The ratio currently has a majority of short positions, indicative of trader bias towards the euro losing ground.

EUR/USD Fundamentals

• 8:00 Spanish Unemployment Rate. Estimate 23.6%. Actual 23.7%.
• 10:00 Italian Retail Sales. Estimate 0.1%. Actual 0.1%.
• 12:45 ECB Minimum Rate. Estimate 0.05%.
• 13:30 ECB Press Conference.
• 13:30 US Unemployment Claims. Estimate 301K.
• 14:00 US HPI. Estimate 0.4%.
• 15:00 US Consumer Confidence. Estimate -11 points.
• 15:30 US Natural Gas Storage. Estimate -231B.
• 16:00 US Crude Oil Inventories. Estimate 2.5M.

*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.