EUR/USD – Euro Slips on Draghi’s Dovish Tone

The euro has edged lower in the Friday session. Currently, EUR/USD is trading at 1.2295, down 0.14% on the day. On the release front, German Industrial Production declined 0.1%, missing the estimate of 0.6%. This marked the fourth decline in the past five months. In the US, the focus is on employment reports. Wage growth is expected to tick lower to 0.2%, while Nonfarm Payrolls are forecast to improve to 205 thousand.

The ECB sent a mixed message on Thursday, triggering strong movement from the euro. As expected, the ECB dropped its easing bias, which was the option to increase monthly purchases if the economy softens. This sent the euro higher, but only briefly, as ECB President Mario Draghi was decidedly dovish at his press conference. Draghi said that eurozone inflation could remain subdued, so the Bank’s monetary policy would remain ‘reactive’. The comments sent the euro sharply lower, as the currency slipped close to 1 percent on Thursday.

The EU is seeing red after US President Trump made good on his threat, and signed an order imposing 25% tariffs on steel imports. EU policymakers have threatened to retaliate with tariffs on US goods, and European Commission President Jean-Claude Juncker was particularly blunt, saying “we can also do stupid”. Fears of an all-out global trade war are weighing on the US dollar and the stock markets, and the resignation of Gary Cohn, a senior economist in the White House who opposed the tariffs, will only dampen investor risk appetite. The ball is now in the EU court, and if the Europeans retaliate and Trump responds with further tariffs, we could see some sharp movement from EUR/USD.

ECB Drops Easing Bias, EUR Climbs

EUR/USD Fundamentals

Friday (March 9)

  • 2:00 German Industrial Production. Estimate +0.6%. Actual -0.1%
  • 2:00 German Trade Balance. Estimate 21.2B. Actual 21.3B
  • 2:45 French Government Balance. Actual -10.8B
  • 2;45 French Industrial Production. Estimate -0.2%. Actual -2.0%
  • 8:30 US Average Hourly Earnings. Estimate 0.2%
  • 8:30 US Nonfarm Employment Change. Estimate 205K
  • 8:30 US Unemployment Rate. Estimate 4.0%
  • 10:00 US Final Wholesale Inventories. Estimate 0.7%

*All release times are GMT

*Key events are in bold

 

EUR/USD for Friday, March 9, 2018

EUR/USD for March 9 at 7:10 EDT

Open: 1.2312 High: 1.2321 Low: 1.2290 Close: 1.2298

EUR/USD Technical

S1 S2 S1 R1 R2 R3
1.2092 1.2200 1.2286 1.2357 1.2460 1.2581

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

  • 1.2286 is a weak support level. It could be tested during the Friday session
  • 1.2357 is the next resistance line

Further levels in both directions:

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

OANDA’s Open Positions Ratio

EUR/USD ratio is almost unchanged in the Friday session. Currently, short positions have a majority (60%), 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.