EUR/USD – Euro in Holding Pattern Ahead of ECB Meeting

EUR/USD is almost unchanged on Thursday, following losses which marked the pair on Wednesday. In the European session, the pair is trading at the 1.13 line. On the release front, the ECB will set interest rates for April, followed by a press conference with ECB president Mario Draghi. The US will follow with two key releases – the Philly Fed Manufacturing Index and Unemployment Claims. On Friday, the Eurozone releases German and Eurozone Manufacturing PMIs.

All eyes are on the ECB on Thursday, as the central bank holds its monthly policy meeting. At the March meeting, the ECB lowered the benchmark rate to a flat 0.00% and raised the asset-purchase program from EUR 60 billion to 80 billion/month. Mario Draghi added that the ECB had no plans to again lower rates. So what can we expect at today’s meeting? The ECB will likely maintain rates this month, but Mario Draghi has surprised the markets in the past, and the message he delivers regarding monetary policy could lead to some volatility from EUR/USD.

Is inflation showing signs of life in the Eurozone? The bloc continues to struggle with low inflation levels, and the threat of deflation remains a constant worry for policymakers. However, there have been some encouraging signs on the inflation front. Last week, there were strong CPI numbers out of Germany and France, the two largest economies in the bloc. On Wednesday, German PPI improved to 0.0%, ending a streak of seven straight declines. Still, inflation levels are far below the ECB target of about 2.0%, despite significant monetary moves by the central bank in March. Earlier in the week, the euro posted gains in response to strong ZEW Economic Sentiment reports from the Eurozone and Germany. The Eurozone indicator climbed 21.5 points, crushing the estimate of 13.9 points. The German ZEW report improved to 11.2 points, above the forecast of 8.2 points and marking a 4-month high. The reports point to increased optimism and could signal that the Eurozone and German economies are gaining strength.

EUR/USD Fundamentals

Thursday (April 21)

• 8:44 Spanish 10-year Bond Auction. Action 1.61%
• 11:45 ECB Mininum Bid Rate. Estimate 0.00%
• 12:30 ECB Press Conference
• 12:30 US Philly Fed Manufacturing Index. Estimate 8.1 points
• 12:30 US Unemployment Claims. Estimate 265K
• 13:00 US HPI. Estimate 0.4%
• 14:00 Eurozone Consumer Confidence. Estimate -9 points
• 14:00 US CB Leading Index. Estimate 0.4%
• 14:30 US Natural Gas Storage. Estimate 6B

Upcoming Key Events

Friday (April 22)

• 7:30 German Flash Manufacturing PMI. Estimate 51.0
• 8:00 Eurozone Flash Manufacturing PMI. Estimate 51.8

*Key events are in bold

*All release times are GMT

EUR/USD for Thursday, April 21, 2016

EUR/USD April 21 at 9:50 GMT

Open: 1.1302 Low: 1.1283 High: 1.1310 Close: 1.1298

EUR/USD Technical

• EUR/USD has shown marginal movement in the Asian and European sessions
• There is resistance at 1.1378
• 1.1278 is a weak support line and could break in the North American session

Further levels in both directions:

• Below: 1.1278, 1.1172, 1.1087 and 1.0989
• Above: 1.1378, 1.1495 and 1.1609
• Current range: 1.1278 to 1.1378

OANDA’s Open Positions Ratio

EUR/USD ratio remains almost unchanged this week. Short positions continue to command a strong majority (62%), indicative of strong trader bias towards EUR/USD breaking out and moving 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.