EUR/USD – Euro Gains Ground, Investors Eye Draghi Testimony

The euro has started the week with gains. In the Monday session, EUR/USD is trading at 1.2342, up 0.38% on the day. There are no data releases in the eurozone. Later in the day, ECB President Mario Draghi testifies before the European Parliament Economic and Monetary Affairs Committee. In the US, New Home Sales is expected to jump to 655 thousand. On Tuesday, Germany releases Preliminary CPI. The US will release durable goods and consumer confidence reports. As well, Federal Chair Jerome Powell will testify before the House Financial Services Committee.

On Thursday, the ECB released the minutes of its January meeting. The markets were looking for some hints regarding future monetary policy, and policymakers indicated that they could re-examine the Bank’s monetary policy “early this year”. The ECB is keeping a close eye on inflation, which has been moving upwards. Still, with inflation below the ECB target of just below 2%, there is little talk about raising interest rates. Policymakers also indicated concern with exchange rates, a theme which has been addressed by Mario Draghi in recent weeks, given the appreciation of the euro – EUR/USD has climbed 2.8% since the start of the year. The minutes voiced “concerns about the recent volatility in the euro exchange rate, which represented a source of uncertainty that had to be monitored with respect to its implications for the medium-term outlook for price stability”. The euro has seen plenty of volatility in February, and currency volatility will likely be high on the agenda of the next policy meeting in March.

Jerome Powell will be on center stage this week, when he testifies before the House of Representatives and the Senate this week. After the recent stock markets volatility, Powell may opt to play it safe and keep away from any splashy headlines, which could lead to more fluctuation in the markets. Powell could choose to focus on the strong US economy and the Fed trimming its balance sheet, and steer away from a discussion of accelerating rate policy in order to head off higher inflation.

A New Sheriff in Town

EUR/USD Fundamentals

Monday (February 26)

  • 9:00 ECB President Draghi Speaks
  • 10:00 US New Home Sales. Estimate 655K
  • 15:15 US FOMC Member Randal Quarles Speaks

Tuesday (February 27)

  • All Day – German Preliminary CPI. Estimate 0.5%
  • 5:00 German Buba President Jens Weidmann Speaks
  • 8:30 US Core Durable Goods Orders. Estimate 0.4%
  • 8:30 US Fed Chair Jerome Powell Testifies
  • 8:30 US Durable Goods Orders. Estimate -2.4%
  • 10:00 US CB Consumer Confidence. Estimate 126.2

*All release times are GMT

*Key events are in bold

EUR/USD for Monday, February 26, 2018

EUR/USD for February 26 at 6:25 EDT

Open: 1.2395 High: 1.2350 Low: 1.2280 Close: 1.2342

EUR/USD Technical

S1 S2 S1 R1 R2 R3
1.2092 1.2200 1.2286 1.2357 1.2481 1.2569

EUR/USD edged higher in the Asian session and has added small gains in European trade

  • 1.2286 is providing support
  • 1.2357 is a weak resistance line. It could be tested during the Monday session

Further levels in both directions:

  • Below: 1.2286, 1.2200 and 1.2092
  • Above: 1.2357, 1.2481, 1.2569 and 1.2660
  • Current range: 1.2286 to 1.2357

OANDA’s Open Positions Ratio

In the Monday session, EUR/USD ratio is showing a slight majority for short positions (52%), This is indicative of EUR/USD reversing directions and moving to lower ground.

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

Currency Analyst at Market Pulse
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.