EUR/USD – Euro Climbs as Trump Talks Tariffs

The euro is unchanged in the Friday session, after posting gains on Thursday. Currently, EUR/USD is trading at 1.2276, up 0.07% on the day. On the release front, German retail sales dropped 0.7%, well off the estimate of a 0.8% gain. This marked a third decline in four months. Later in the day, we’ll get a look at Eurozone PPI, which is expected to improve to 0.4%. In the US, the UoM Consumer Sentiment report is expected to jump to 99.4 points.

The euro posted considerable gains in the Asian session, after US President Trump announced that he would be imposing stiff tariffs on steel and aluminum, in order to protect domestic producers. Under the new scheme, foreign steel will be taxed at 25% and aluminum at 10%. The response to the move was overwhelmingly negative, both abroad and in the US. China and the EU immediately denounced the move , whileUS auto makers and oil and gas producers also condemned the tariffs, saying they could get caught in the middle of a nasty trade war if other countries retaliate. In imposing the tariffs, Trump relied on a provision which allows such measures for national security, but clearly, US trading partners will not quietly accept these protectionist measures.

Recent indicators show that inflation in the eurozone is steady, but remains well below the ECB target of around 2 percent. Eurozone CPI dipped to 1.2% in February, down from 1.3% in January. Economic growth has rebounded, led by a robust German economy. Still, there is plenty of slack in the eurozone economy and the ECB is not under pressure to tighten policy. The Bank will meet on March 8, and no major changes are expected. Policymakers could deliberate the possibility of removing the Bank’s easing bias towards increasing bond purchases if needed. A removal of the easing bias would likely be interpreted as a plan to tighten policy and would be bullish for the euro.

A Dizzying Day for Markets

Markets Rattled By Protectionist Trump

EUR/USD Fundamentals

Friday (March 2)

• 2:00 German Retail Sales. Estimate 0.8%. Actual -0.7%
• 2:00 Import Prices. Estimate 0.4%. Actual 0.5%
• 3:00 Spanish Unemployment Change. Estimate -7.2K. Actual -6.3K
• 5:00 Eurozone PPI. Estimate 0.4%
• 10:00 US Revised UoM Consumer Sentiment. Estimate 99.4
• 10:00 US Revised UoM Inflation Expectations

*All release times are GMT

*Key events are in bold

EUR/USD for Friday, March 2, 2018

EUR/USD for March 2 at 4:30 EDT

Open: 1.2269 High: 1.2288 Low: 1.2252 Close: 1.2276

EUR/USD Technical

EUR/USD was flat in the Asian session. In European trade, the pair edged lower but has recovered

• 1.2000 has switched to a support level after strong gains by the pair on Thursday
• 1.2286 was tested in resistance earlier and remains under pressure

Further levels in both directions:

• Below: 1.2200, 1.2092, 1.2025 and 1.1915
• Above: 1.2286, 1.2357 and 1.2481
• Current range: 1.2200 to 1.2286

OANDA’s Open Positions Ratio

EUR/USD ratio continues to show very little movement this week. Currently, short positions are showing a majority (57%), indicative of EUR/USD reversing directions and heading to lower ground.

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