EUR/USD is almost unchanged in the Monday session, as the pair trades at 1.0620. US markets are closed for Presidents’ Day, so we’re unlikely to see much movement from the pair. In the eurozone, German PPI improved to 0.7%, beating the forecast of 0.3%. The eurozone will release Consumer Confidence, which is expected to remain unchanged at -5 points. On Tuesday, Germany and the eurozone will release Flash Manufacturing PMI reports.
After Fed Chair Janet Yellen’s upbeat take on the US economy, the markets are keen to review the Fed policy minutes, which will be released on Wednesday. Testifying before Congress last week, Yellen noted that inflation is moving towards the Fed’s 2 percent target, the labor market remains red-hot and consumer spending is strong. Yellen strongly hinted that a rate hike was imminent, leaving the markets to speculate if the Fed prefers to make a move in March or June. If the US economy stays on track in 2017, analysts expect two or three rate hikes of a quarter-point. At the same time, the Fed wants to take into account the economic stance of the new administration, but this remains an elusive goal. Donald Trump continues to have difficulty filling in key cabinet positions and the media continues to probe connections between Trump officials and Russia. Trump has fired back by bitterly attacking the media, and lost in the mayhem is a clear and coherent economic policy. Although Trump has been in office for just over a month, the perception of a muddled and disoriented White House is creating uncertainty in the markets, and is, as Trump would say, “bad for business”.
The ECB released the minutes of its January policy meeting on Thursday. The minutes indicated that the central bank continues to have little appetite for reducing stimulus. Policymakers stated that the recent climb in inflation could prove to be temporary and there is political uncertainty ahead. France and Germany, the two largest economies in the eurozone, go to the polls later this year, as does the Netherlands. Inflation has moved close to the central bank’s target of around 2 percent, prompting calls from Germany and elsewhere to tighten monetary policy. At this point in time, a majority of ECB policy makers are in favor of maintaining course the asset-purchase program, which ends in December. However, if growth and inflation numbers continue to climb, there will be increased pressure and louder voices calling for a tightening in monetary policy.
Monday (February 20)
- 2:00 German PPI. Estimate 0.3%. Actual 0.7%
- All Day – ECOFIN Meetings
- 6:00 German Buba Monthly Report
- 10:00 Eurozone Consumer Confidence. Estimate -5
Tuesday (February 21)
- 3:30 German Flash Manufacturing PMI. Estimate 56.2
- 4:00 Eurozone Flash Manufacturing PMI. Estimate 55.0
*All release times are EST
*Key events are in bold
EUR/USD for Monday, February 20, 2017
EUR/USD February 20 at 6:00 EST
Open: 1.0630 High: 1.0627 Low: 1.0601 Close: 1.0622
EUR/USD has showed limited movement in the Asian and European sessions
- 1.0616 was tested in support earlier and is a weak line
- 1.0708 is the next resistance line
Further levels in both directions:
- Below: 1.0616, 1.0506, 1.0414 and 1.0333
- Above: 1.0708, 1.0873 and 1.0985
- Current range: 1.0616 to 1.0708
OANDA’s Open Positions Ratio
EUR/USD ratio is almost unchanged in the Monday session. Currently, long positions have a majority (54%), indicative of trader bias towards the euro breaking out and moving higher.