EUR/USD – Strong German Business Climate Sends Euro to 14-Week High

EUR/USD has edged higher on Monday, as the pair trades at 1.0860. On the release front, German Ifo Business Climate climbed to 112.3, above the forecast of 111.2 points. In the US, there are no economic indicators, but we’ll hear from two FOMC members – Charles Evans and Robert Kaplan. On Tuesday, the US releases CB Consumer Confidence.

The week has started on a bright note in Europe. German Ifo Business Climate rose to 112. 3 points, its highest level since July 2011. The release underscores high optimism in the business sector, despite rumblings of protectionism from the US and the uncertainty over Brexit. Germany, the largest economy in Europe, continues to post strong numbers, which has been good news for the eurozone economy. Last week’s PMIs pointed to expansion in the manufacturing and service sectors. German and eurozone Manufacturing PMIs  both beat their estimates and hit their highest levels since 2011. The markets are keeping a close eye on Germany, which later this week releases CPI, retail sales and unemployment claims. One soft spot in the economy, however, is consumer confidence. GfK German Consumer Climate lost ground for a second straight month, as the indicator dropped to 9.8 in March, its lowest level since November 2016. Eurozone Consumer Confidence remains weak, as the indicator posted a decline of -5 in March, almost unchanged from a month earlier. These soft numbers are largely a result of higher inflation, as consumers are concerned about their reduced purchasing power.

The market euphoria over President Trump’s upset election win is long past. The inquiry into the Trump administration’s links with Russia continues to make headlines, and is another cause for concern for nervous investors. Trump has been in office for over two months, but he has yet to provide any details over even an outline of economic policy. Last week, Trump’s proposed bill to change Obamacare was not even voted on, as the White House could not garner enough support to pass the bill. This debacle will only increase market uneasiness over Trump, and could send the dollar downwards even further.

Week Ahead Trump Administration Fails with Healthcare Bill

EUR/USD Fundamentals

Monday (March 27)

  • 8:00 German Ifo Business Climate. Estimate 111.2. Actual 112.3
  • 8:00 Eurozone M3 Money Supply. Estimate 4.9%. Actual 4.7%
  • 8:00 Eurozone Private Loans. Estimate 2.3%. Actual 2.3%
  • 17:15 US FOMC Member Charles Evans Speech
  • 22:30 US FOMC Robert Kaplan Speech

Tuesday (March 28)

  • 14:00 US CB Consumer Confidence. Estimate 113.9

*All release times are EST

*Key events are in bold

EUR/USD for Monday, March 27, 2017

EUR/USD March 27 at 5:40 EST

Open: 1.0846 High: 1.0873 Low: 1.0837 Close: 1.0866

EUR/USD Technical

S1 S2 S1 R1 R2 R3
1.0506 1.0616 1.0708 1.0873 1.0985 1.1097

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

  • 1.0708 continues to provide support
  • 1.0873 is the next resistance line

Further levels in both directions:

  • Below: 1.0708, 1.0616 and 1.0506
  • Above: 1.0873, 1.0985 and 1.1097
  • Current range: 1.0708 to 1.0873

OANDA’s Open Positions Ratio

EUR/USD ratio has shown movement towards short positions. Currently, short positions have a strong majority (63%), indicative of trader bias towards EUR/USD reversing directions and moving lower.

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)