EUR/USD – Euro Under Pressure, German Business Climate Improves

EUR/USD has posted slight losses on Tuesday, as the pair trades at the 112 line in the European session. On the release front, German Ifo Business Climate improved to 106.7 points, beating expectations. German Manufacturing PMI remained steady at 50.4 points, short of the estimate. Eurozone Manufacturing PMI improved to 51.4 points, matching the forecast. In the US, there are no major releases on the schedule.

The Eurozone released a host of indicators on Tuesday, including PMIs from the manufacturing and services sectors. German Services PMI improved to 55.5 points, pointing to strong expansion. However, Manufacturing PMI came in at 50.4 points, short of the forecast of 50.4 points. There was better news from German Ifo Business Climate, which improved to 106.7 points, ahead of the estimate of 106.1 and marking a 3-month high. Later in the day, we’ll get a look at Eurozone and German ZEW Economic Sentiment.

Will the real Federal Reserve please stand up? Last week’s Federal Reserve policy statement appeared to pour cold water on any imminent rate hikes, but “not so fast”, according to two Federal Reserve officials. On Monday, John Williams, president of the San Francisco Fed, said that the Fed could raise rates in April and June, if economic conditions improve. Although the dot plot (an FOMC projection of rate hikes) was lowered at the March meeting, he insisted that the Fed had not changed its path of rate hikes. His comments were echoed by Atlanta Fed Dennis Lockhart, who also said that an April rate move was a clear possibility. Lockhart noted that the US economy was holding up well, despite weak global conditions. Lockart said that the economy was close to full employment and the Fed’s target of 2 percent inflation was attainable. However, it should be kept in mind that neither Willams nor Lockhart is a a voting member of the FOMC. The markets will be hoping to learn more about the Fed’s plans from two other Fed presidents who will speak on Tuesday, Charles Evans and Patrick Harker.

EUR/USD Fundamentals

Tuesday (March 22)

• 8:00 French Flash Manufacturing PMI. Estimate 50.2 points. Actual 49.6 points
• 8:00 French Flash Flash Services PMI. Estimate 49.5 points. Actual 51.2 points
• 8:30 German Flash Manufacturing PMI. Estimate 50.9 points. Actual 50.4 points
• 8:30 German Flash Services PMI. Estimate 55.1 points. Actual 55.5 points
• 9:00 German Ifo Business Climate. Estimate 106.1. Actual 106.7 points
• 9:00 Eurozone Flash Manufacturing PMI. Estimate 51.4 points. Actual 51.4 points
• 9:00 Eurozone Flash Services PMI. Estimate 53.5 points. Actual 54.0 points
• 10:00 German ZEW Economic Sentiment. Estimate 6.3 
• 10:00 Eurozone ZEW Economic Sentiment. Estimate 8.2 points
• 13:00 US HPI. Estimate 0.5%
• 13:45 US Flash Manufacturing PMI. Estimate 51.6 points
• 14:00 Belgian NBB Business Climate. Estimate -6.0 points
• 14:00 US Richmond Manufacturing Index. Estimate -1 points

Upcoming Key Events

Wednesday (March 22)

• 14:00 US New Home Sales. Estimate 512K

*Key events are in bold

*All release times are GMT

EUR/USD for Tuesday, March 22, 2016

EUR/USD March 22 at 9:10 GMT

Open: 1.1235 Low: 1.1169 High: 1.1260 Close: 1.1195

EUR/USD Technical

• EUR/USD has shown marginal movement in the Asian session and has posted losses in European trade
• There is resistance at 1.1278
• 1.1172 was tested earlier in support and is under strong pressure. It could break during the day

Further levels in both directions:

• Below: 1.1172, 1.1087, 1.0941 and 1.0847
• Above: 1.1278, 1.1387, 1.1495, and 1.1638
• Current range: 1.1172 to 1.1278

OANDA’s Open Positions Ratio

EUR/USD ratio is showing little change. Short positions have a strong majority (61%), which is indicative of strong trader bias towards EUR/USD continuing to head to lower levels.

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.