- MarketPulse - https://www.marketpulse.com -

EUR/USD – Euro Quiet Ahead of US Nonfarm Payrolls

It’s been an uneventful week for EUR/USD, which continues to trade between 1.06 and 1.07. Currently, the pair is trading at 1.0640. On the release front, German indicators continue to impress, as Industrial Trade and Trade Balance both beat expectations. In the US, employment numbers will be in focus, highlighted by Nonfarm Payrolls. The markets are braced for a weak reading of 174 thousand. Traders should be prepared for movement from EUR/USD around the release time of the employment numbers, at the start of the North American session.

The ECB plans to hold the course on monetary policy, according to the minutes of its March policy meeting. The minutes indicated that the ECB plans to maintain its monetary policy, with no changes to interest rate levels or the central bank’s asset-purchase scheme. The minutes added that there was “considerable risk surrounding the economic outlook and the robustness of inflation convergence”, which warranted maintaining the downward bias on interest rates. Essentially, the ECB has promised “more of the same”, with the asset-purchase scheme scheduled to remain in place until December. The powerful German central bank is not of the same view, however, as it would like to see tighter monetary policy, given the improvement in the economic data and higher inflation levels. March PMI reports impressed, as German and Eurozone Services and Manufacturing PMIs pointed to expansion. If the Eurozone economy continues to improve, we can expect the calls in favor of higher rates to get louder.

There were no surprises from the Federal Reserve policy minutes, which were released on Wednesday. The minutes had a slightly hawkish tone, as policymakers noted upside risk to the US economy. However, policymakers remain divided on whether inflation will rise to the Fed target of 2.0% percent. The minutes also stated FOMC members were in favor of taking steps to trim the $4.5 trillion balance sheet, which has ballooned since the Fed implemented its aggressive quantitative easing program back in 2008. However, the Fed is unlikely to make any moves on this front till later in the year, as President Trump’s fiscal policy remains a big question mark. So what’s next for the Federal Reserve? According to the CME’s Fed Watch, the odds of a rate hike at the May meeting are just 5 percent, while the likelihood of a rate hike in June stand at 63 percent.

Fed Minutes Show a Divided Central Bank on Trump and Inflation [1]

EUR/USD Fundamentals

Friday (April 7)

*All release times are EST

*Key events are in bold

EUR/USD for Friday, April 7, 2017

EUR/USD April 7 at 6:35 EST

Open: 1.0643 High: 1.0660 Low: 1.0632 Close: 1.0638

EUR/USD Technical

S1 S2 S1 R1 R2 R3
1.0340 1.0506 1.0616 1.0708 1.0873 1.0985

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

Further levels in both directions:

OANDA’s Open Positions Ratio

EUR/USD ratio is showing slight gains in long positions. Currently, long positions have a majority (57%), indicative of trader bias towards EUR/USD breaking out and moving upwards.

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 [5]

Currency Analyst at Market Pulse [6]
Kenny Fisher joined OANDA in 2012 as a Currency Analyst. Kenny writes a daily column about current economic and political developments affecting the major currency pairs, with a focus on fundamental analysis. Kenny began his career in forex at Bendix Foreign Exchange in Toronto, where he worked as a Corporate Account Manager for over seven years.