EUR/USD – Euro Moves Up, All Eyes on Federal Reserve

EUR/USD has rebounded with gains in the Wednesday session, after posting losses on Tuesday. Currently, the pair is trading at 1.2277, up 0.30% on the day. On the release front, there are no major eurozone or German indicators. In the US, the current account deficit is expected to widen to $125 billion. On the housing front, Existing Home Sales is forecast to rise to 5.41 million. All eyes are on the Federal Reserve, which is expected to raise the benchmark rate to a range of between 1.50% and 1.75%. On Thursday, Germany and the euorozone release manufacturing PMI, and Germany will also publish the Ifo Business Climate. In the US, the key indicator is unemployment claims.

The markets are keeping a close eye on the Federal Reserve, which will release a rate statement later in the day. The Fed is expected to raise rates for the first time in 2018, and Fed Chair Jerome Powell will preside as chair of the FOMC for the first time, followed by Powell’s first post-FMOC press conference. The Fed has sounded marginally more hawkish recently – will this trend continue in the rate statement? The Fed rate projection remains at three rates for 2018, but with the US economy continuing to perform well, this forecast could be revised upwards to four rates. If the rate statement is unexpectedly hawkish, the US dollar could respond with gains.

After months of rough rhetoric between Britain and the EU, the two sides announced that there would be a transition period following the UK’s departure from the EU in March 2019. The transition deal will kick in at that time, lasting until December 2020. The deal covers the rights and status of EU citizens in the UK and British citizens in the EU, and allows the UK to pursue new trade agreements during that time. There are still some issues to iron out, such as the Northern Ireland border. The transition period is a major, positive development, in that it will enable Britain to enjoy the benefits of the common market, albeit without a seat at the table.

Everything that needs to be said has already been said

USD/CAD – Canada’s loonie gets a NAFTA Lift

EUR/USD Fundamentals

Wednesday (March 21)

  • Tentative – German 10-year Bond Auction
  • 8:30 US Current Account. Estimate -125B
  • 10:00 US Existing Home Sales. Estimate 5.41M
  • 14:00 US FOMC Economic Projections
  • 14:00 US FOMC Statement
  • 14:00 US Federal Funds Rate. Estimate <1.75%
  • 14:30 US FOMC Press Conference

Thursday (March 22)

  • 4:30 German Flash Manufacturing PMI. Estimate 59.8
  • 4:30 German Flash Services PMI. Estimate 55.0
  • 5:00 Eurozone Flash Manufacturing PMI. Estimate 58.1
  • 5:00 Eurozone Flash Services PMI. Estimate 56.0
  • 5:00 German Ifo Business Climate. Estimate 114.7
  • 8:30 US Unemployment Claims. Estimate 225K

*All release times are GMT

*Key events are in bold

EUR/USD for Wednesday, March 21, 2018

EUR/USD for March 21 at 6:30 EDT

Open: 1.2241 High: 1.2291 Low: 1.2241 Close: 1.2277

EUR/USD Technical

S1 S2 S1 R1 R2 R3
1.2025 1.2092 1.2235 1.2319 1.2460 1.2581

EUR/USD has posted small gains in the Asian and European sessions

  • 1.2235 is providing support
  • 1.2319 is the next line in resistance

Further levels in both directions:

  • Below: 1.2235, 1.2092 and 1.2025
  • Above: 1.2319, 1.2460, 1.2581
  • Current range: 1.2235 to 1.2319

OANDA’s Open Positions Ratio

EUR/USD ratio is showing slight gains in long positions. Currently, short positions have a majority (57%), 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.