EUR/USD – Euro Edges Higher, Markets Eyes US Durables

EUR/USD has posted slight gains in the Monday session. Currently, the pair is trading at 1.0580. On the release front, Eurozone Private Loans increased by 2.2%, above the estimate of 2.1%. M3 Money Supply edged lower to 4.9%, matching the forecast. The US starts off the week with durable goods orders reports and Pending Home Sales. On Tuesday, the US releases Preliminary GDP and CB Consumer Confidence. As well, President Trump will address a joint session of Congress.

There was good news for the eurozone on Monday, as bank lending to eurozone households improved for a third straight month, rising to 2.2% in January. Lending has been moving upwards since 2015, but has only recently shown strong gains. This could be a sign that the ECB’s stimulus program is finally bearing results. The central bank recently extended the QE program until December and is unlikely to end it earlier. Meanwhile, M3 Money Supply, which measures growth in the amount of money circulating in the eurozone, slowed to 4.8%, down from 5.0% a month earlier. This indicator is closely watched, as it often predicts economic activity.

US data was soft on Friday. Revised UoM Consumer Sentiment dropped to 96.3 in February, compared to 98.5 a month earlier. Still, this figure edged above the forecast of 96.1. On the housing sector, New Home Sales improved to 555 thousand in January, but this was well short of the forecast of 575 thousand. This follows Existing Home Sales, which jumped to 5.69 million, above the estimate of 5.55 million. On Monday, we’ll get a look at Pending Home Sales, which is expected to dip to 1.1%.

President Trump’s administration has had a rough first month, beset by constant friction with the media and trouble filling in key cabinet positions. Trump will address Congress on Tuesday and the nation will be listening closely. Will we see the combative, outspoken Trump, or will he opt for a more conciliatory approach? In order to pass key legislation, Trump will have to make nice with lawmakers from both sides of the fence, and this speech would be an ideal time to offer a hand of cooperation rather than combat. The markets will be looking for some details about the administration’s economic plan – if this is lacking, market sentiment could sour, dragging down the US dollar.

Week Ahead Dollar Mixed as Trump Pro-Growth Policies Remain Vague

EUR/USD Fundamentals

Monday (February 27)

  • 3:00 Spanish Flash CPI. Estimate 3.3%. Actual 3.0%
  • 3:00 Eurozone M3 Money Supply. Estimate 4.9%. Actual 4.9%
  • 4:00 Eurozone Private Loans. Estimate 2.1%. Actual 2.2%
  • Tentative – Italian 10-y Bond Auction
  • 8:30 US Core Durable Goods Orders. Estimate 0.5%
  • 8:30 US Durable Goods Orders. Estimate 1.6%
  • 10:00 US Pending Home Sales. Estimate 1.1%
  • 11:00 US FOMC Member Robert Kaplan Speech

Tuesday (February 28)

  • 8:30 US Preliminary GDP. Estimate 2.1%
  • 10:00 US CB Consumer Confidence. Estimate 111.1

*All release times are EST

*Key events are in bold

EUR/USD for Monday, February 27, 2017

EUR/USD February 27 at 5:45 EST

Open: 1.0552 High: 1.0591 Low: 1.0551 Close: 1.0583

EUR/USD Technical

S1 S2 S1 R1 R2 R3
1.0333 1.0414 1.0506 1.0616 1.0708 1.0873

EUR/USD was flat in the Asian session and has edged higher in European trade

  • 1.0506 is providing support
  • 1.0616 is a weak resistance line

Further levels in both directions:

  • Below: 1.0506, 1.0414 and 1.0333
  • Above: 1.0616, 1.0708, 1.0873 and 1.0985
  • Current range: 1.0506 to 1.0616

OANDA’s Open Positions Ratio

EUR/USD ratio is showing slight movement towards short positions. Currently, long positions have a majority (54%), indicative of trader bias towards the euro continuing to move higher.

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.

Kenny Fisher

Kenny Fisher

Market Analyst at OANDA
A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.
Kenny Fisher

Latest posts by Kenny Fisher (see all)