EUR/USD – Euro Subdued in Holiday Trade

EUR/USD is almost unchanged in the Monday session. Currently, the pair is trading at 1.2331 up 0.06% on the day. It’s a quiet start to the week, as European markets are closed for the Easter holiday. The US will release ISM Manufacturing PMI, which is expected to soften to 60.1 points. On Tuesday, Germany releases Retail Sales, and Germany and the eurozone release Manufacturing PMI reports.

Eurozone inflation stands at 1.1%, well below the ECB target of around 2%. This means that the ECB is unlikely to change monetary policy anytime soon. Still, German policymakers want to see a tighter policy, given the robust German economy. Last week, the head of the German central bank, Jens Weidmann, called for asset purchases to end “soon”. Weidmann also raised the possibility of interest rate hikes, saying that a rate increase in mid-2019 was “probably not entirely unrealistic.” Weidmann received support from the head of the Dutch central bank, Klaas Knot, who said that the ECB should not continue asset-purchases after September, as “the top priority is to normalize monetary policy”. In January, the ECB reduced its asset-purchase program to EUR 30 billion, and the program is scheduled to wind up in September. If the eurozone economy performs well and inflation moves higher, there will be more pressure on the ECB not to extend the asset-purchase program. If the bank decides to end this stimulus scheme, the euro could improve sharply.

China has responded to recent US tariffs, imposing its own duties on a range of US goods, including frozen pork and wines. This move is bound to escalate tensions between the two economic giants, and has raised fears that a new global trade war could be underway. With European markets closed on Monday, we could see some movement in the currency markets on Tuesday, once investors react to the news. If the tit-for-tat measures continue, both the US and Chinese economies could suffer, which could lead to a global slowdown. Both sides are digging in tough and pointing fingers, and if tensions worsen, the volatility we’ve seen in the markets is likely to continue.

Asia markets higher on muted trade

EUR/USD Fundamentals

 Monday (April 2)

  • 9:45 US Final Manufacturing PMI. Estimate 55.7
  • 10:00 US ISM Manufacturing PMI. Estimate 60.1
  • 10:00 US Construction Spending. Estimate 0.4%
  • 10:00 US ISM Manufacturing Prices. Estimate 72.5

 Tuesday (April 3)

  • 2:00 German Retail Sales. Estimate 0.7%
  • 3:55 German Final Manufacturing PMI. Estimate 58.4
  • 4:00 Eurozone Final Manufacturing PMI. Estimate 56.6

*All release times are DST

*Key events are in bold

EUR/USD for Monday, April 2, 2018

EUR/USD for April 2 at 5:25 DST

Open: 1.2324 High: 1.2332 Low: 1.2311 Close: 1.2331

EUR/USD Technical

S1 S2 S1 R1 R2 R3
1.2092 1.2235 1.2319 1.2460 1.2581 1.2662

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

  • 1.2319 is a fluid line. Currently, it is a weak support line
  • 1.2460 is the next resistance line

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 almost unchanged in the Monday session. Currently, short positions still have a majority (55%), indicative of EUR/USD breaking out 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.