EUR/USD – Euro Dips Ahead of ECB Rate Decision

The euro has edged lower in the Thursday session. Currently, EUR/USD is trading at 1.2376, down 0.28% on the day. On the release front, German Factory Orders declined 3.9%, weaker than the estimate of -1.9%. This marked the steepest decline since January 2017. Later in the day, the ECB releases its rate decision, followed by a press conference with Mario Draghi. In the US, today’s key indicator is unemployment claims.

Investors are keeping a close eye on the ECB, which will set the benchmark rate on Thursday. This will be followed by a press conference with Mario Draghi. Interest rate levels are expected to remain at a flat 0.0%, where they have been pegged for the past two years. What could move the markets, however, is the language used in the press release following the rate decision, as well as Draghi’s press conference. The ECB has continuously included an easing bias, which means that it could increase or extend asset purchases if the economic outlook worsens. If the Bank removes this line, it would represent a less dovish stance, which could push the euro higher. Starting in January, the ECB reduced its monthly asset purchases to EUR 30 billion, and this stimulus program is scheduled to wind up in September. The Bank could extend purchases past this date, although such a move would likely not stir up the markets.

Investors continue to track the latest developments in the tariff crisis, which has shaken up the markets over the past week. President Trump’s threat to impose stiff tariffs on steel imports has infuriated US trading partners, as well as sharp criticism from senior Republican lawmakers. There was further drama on Tuesday, as Gary Cohn, Trump’s chief economic adviser, resigned. Cohnn was a strong advocate of free trade, so his resignation could weaken opposition in the White House to the tariffs. Will Trump make good on his threat or back off? Until the situation is resolved, traders should be prepared for continuing volatility in the markets.

Uncertainty Lingers

ECB to Prepare Markets For End of QE

EUR/USD Fundamentals

Thursday (March 8)

  • 2:00 German Factory Orders. Estimate -1.9%. Actual -3.9%
  • 7:30 US Challenger Job Cuts
  • 7:45 ECB Minimum Bid Rate. Estimate 0.00%
  • 8:30 ECB Press Conference
  • 8:30 US Unemployment Claims. Estimate 220K
  • 10:30 US Natural Gas Storage. Estimate -58B

Friday (March 9)

  • 2:00 German Industrial Production. Estimate 0.6%
  • 2:00 German Trade Balance. Estimate 21.1B
  • 8:30 US Average Hourly Earnings. Estimate 0.2%
  • 8:30 US Nonfarm Employment Change. Estimate 201K
  • 8:30 US Unemployment Rate. Estimate 4.0%

*All release times are GMT

*Key events are in bold

EUR/USD for Thursday, March 8, 2018

EUR/USD for March 8 at 6:10 EDT

Open: 1.2411 High: 1.2416 Low: 1.2378 Close: 1.2376

EUR/USD Technical

S1 S2 S1 R1 R2 R3
1.2200 1.2286 1.2357 1.2460 1.2581 1.2660

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

  • 1.2357 is a weak support level. It could be tested during the Thursday session
  • 1.2460 is the next resistance line

Further levels in both directions:

  • Below: 1.2357, 1.2286, 1.2200 and 1.2092
  • Above: 1.2460, 1.2581 and 1.2599
  • Current range: 1.2357 to 1.2460

OANDA’s Open Positions Ratio

EUR/USD ratio is showing movement towards short positions. Currently, short positions have a majority (61%), indicative of EUR/USD continuing to move 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.