EUR/USD – Euro Starts Week Sideways as Investors Search for Cues

EUR/USD has ticked higher in the Monday session. Currently, the pair is trading at 1.2295, up 0.05% on the day. On the release front, the Eurozone trade surplus fell to EUR 19.9 billion, missing the estimate of EUR 22.6 billion. This marked a 3-month low. There are no US events on the schedule. On Tuesday, Germany releases PPI and ZEW Economic Sentiment.

On Friday, US numbers were mixed, and EUR/USD showed limited movement. Construction data disappointed, as Building Permits dropped to 1.30 million, shy of the estimate of 1.30 million. Housing Starts followed a similar trend, falling to 1.24 million and missing the forecast of 1.29 million. There was better news from consumer confidence, as UoM Consumer Sentiment improved to 102.0, beating the estimate of 99.3 points. This marked the first time that the indicator has been over the symbolic 100 level since October 2017.

The eurozone economy is enjoying a solid first quarter in 2018. A stronger global appetite has boosted exports and the manufacturing sector, while unemployment continues to drop. However, inflation, which has persistently hovered at low levels, continues to pose a problem for policymakers. In fact, Eurozone Final CPI has been dropping in recent months, and this worrisome trend continued on Friday, when the indicator dropped to 1.1%, down from 1.3% a month earlier. This marked the weakest gain since December 2016. ECB President Mario Draghi addressed inflation concerns last week, and sounded cautious. Draghi said that the ECB still needed to see evidence that inflation was gaining strength before there could be any talk about a change in monetary policy. In the meantime, Draghi said the ECB would remain “patient, persistent and prudent”. Stronger economic conditions have led to growing speculation that the ECB will wind up its stimulus program in September. However, there is still plenty of slack in the economy, and coupled with low inflation, Draghi can afford to remain cautious and maintain current monetary policy for some time.

EUR/USD Fundamentals

Monday (March 19)

  • 5:00 Italian Industrial Production. Estimate -0.5%. Actual -1.9%
  • 6:00 Italian Trade Balance. Estimate 4.87B. Actual -0.09B
  • 6:00 Eurozone Trade Balance. Estimate 22.6B. Actual 19.9B
  • 7:00 German Buba Monthly Report
  • 9:40 US FOMC Member Raphael Bostic Speaks

Tuesday (March 20)

  • 3:00 German PPI. Estimate 0.1%
  • 6:00 German ZEW Economic Sentiment. Estimate 13.1
  • 6:00 Eurozone ZEW Economic Sentiment. Estimate 28.1
  • 11:00 Eurozone Consumer Confidence. Estimate 0

*All release times are GMT

*Key events are in bold

EUR/USD for Monday, March 19, 2018

EUR/USD for March 19 at 6:10 EDT

Open: 1.2289 High: 1.2292 Low: 1.2258 Close: 1.2289

EUR/USD Technical

S1 S2 S1 R1 R2 R3
1.2025 1.2092 1.2200 1.2286 1.2357 1.2460

EUR/USD edged lower in the Asian session but has recovered in European trade

  • 1.2200 is providing support
  • 1.2286 was tested earlier in resistance and is a weak line

Further levels in both directions:

  • Below: 1.2200 and 1.2092 and 1.2025
  • Above: 1.2286, 1.2357, 1.2460 and 1.2581
  • Current range: 1.2200 to 1.2286

OANDA’s Open Positions Ratio

EUR/USD ratio is unchanged in the Monday session. Currently, short positions have a majority (58%), 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

Market Analyst at OANDA
A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.