EUR/USD – Euro Starts Week with Gains

EUR/USD is higher on Monday, continuing the gains which marked the Friday session. Currently, the pair is trading at 1.2412, up 0.47% on the day. There are no data releases on the schedule. We’ll hear from the head of the German central bank, Jens Weidmann, as well as from three FOMC members – William Dudley, Loretta Mester, Randal Quarles. On Tuesday, the key event of the day is US CB Consumer Confidence.

US durable goods reports ended the week on a high note, but the dollar still lost ground on Friday. Core Durable Goods Orders rebounded with a strong gain of 1.2%, crushing the estimate of 0.5%. This marked the strongest gain since July 2016. Durable Goods Orders jumped to an 8-month high, with a gain of 3.1%. The reading easily beat the forecast of 1.6%. The US manufacturing sector continues to expand at an impressive clip, a result of stronger global growth and a cheaper US dollar, which makes US goods less expensive for foreign buyers.

The business sector continues to have strong confidence in the German economy, but there is concern about possible headwinds due to recent tariffs imposed by the Trump administration. The German Ifo Business Climate report dipped to 114.7 in March, which matched the forecast. However, this marked a second straight drop, and was the lowest reading in 11 months. The report attributed lower business morale to concerns that tariffs could hurt transatlantic trade, as well as the negative impact of a stronger euro. On the bright side, tax reform in the US and the economic rebound in the eurozone have increased the demand for German goods and services.

Are we headed for a global trade war? There are some worrying signs, as US President Trump slapped 25% tariffs on up to $60 billion worth of Chinese imports on Thursday. Trump said that the tariffs are needed to address the massive trade deficit with China, which stands at $375 billion. For its part, China wasted no time in threatening to retaliate, saying it was planning to impose tariffs on 128 US products, which would amount to $3 billion in imports. The tariffs directed against China come on the heels of tariffs on steel imports coming into the US, although the US has promised exemptions to the EU and other trading partners. There is serious concern that these moves could ignite a global trade war, and if the US tariffs remain in place, as downturn in the Chinese economy could spread and possibly a global recession.

Manic Monday or Just Singing the Stock Market Blues ?

Trade War Worries Ease as Risk Appetite Rebounds

EUR/USD Fundamentals

Monday (March 26)

• 5:30 German Buba President Weidmann Speaks
• 12:30 US FOMC Member William Dudley Speaks
• 16:30 US FOMC Member Loretta Mester Speaks
• 19:10 US FOMC Member Randal Quarles Speaks

 Tuesday (March 27)

• 2:00 German Import Prices. Estimate -0.3%
• 4:00 Eurozone Private Loans. Estimate 3.0%
• 9:00 US S&P/CS Composite-20 HPI. Estimate 6.1%
• 10:00 US CB Consumer Confidence. Estimate 131.2
• 10:00 US Richmond Manufacturing Index. Estimate 23
• 11:00 US FOMC Raphael Bostic Speaks

*All release times are DST

*Key events are in bold

EUR/USD for Monday, March 26, 2018

EUR/USD for March 26 at 6:15 DST

Open: 1.2354 High: 1.2414 Low: 1.2350 Close: 1.2412

EUR/USD Technical

EUR/USD edged higher in the Asian session and continues to move higher in European trade

• 1.2319 is providing support
• 1.2460 is the next line in resistance

Further levels in both directions:

• Below: 1.2319, 1.2235, 1.2092 and 1.2025
• Above: 1.2460, 1.2581 and 1.2662
• Current range: 1.2319 to 1.2460

OANDA’s Open Positions Ratio

EUR/USD ratio is showing little movement in the Monday session. Currently, short positions have a majority (60%), 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.