EUR/USD has steadied on Thursday, after strong gains on Wednesday. Currently, the pair is trading at 1.1404, down 0.08% on the day. On the release front, there are no German or eurozone indicators. In the U.S., the Philly Fed Manufacturing Index is expected to rebound with a gain of 4.6, after a rare decline in January. Unemployment claims are projected to dip to 226 thousand. On Friday, Germany and the eurozone release services and manufacturing PMI reports.
The Federal Reserve has been sending out a steady dose of dovish messages since the start of the year, but the sharply dovish stance at the Wednesday policy meeting was a surprise. The Fed’s rate outlook (dot plot), which is released each quarter, showed that a majority of FOMC members expect no rate hikes in 2019. This was in sharp contrast to the previous quarter’s forecast, in which the FOMC projected two hikes this year.
The rate statement was downright pessimistic, stating that economic activity “has slowed”. Policy makers singled out slower growth in household spending and business investment and noted that inflation has decreased due to lower energy prices. The Fed also announced that it would stop reducing its balance sheet by $50 billion a month. This move is a loosening of policy and is intended to stimulate the economy. The new Fed forecast projects GDP growth of 2.1%, down from 2.3% in December.
European leaders meet in Brussels on Thursday, where Prime Minister May will request an extension for Brexit. The Europeans are exasperated by turmoil surrounding Brexit and the inability of the British government to pass the withdrawal agreement in parliament. Jean-Claude Juncker, the President of the European Commission, said on Wednesday that the E.U. would not provide May with an answer immediately, but would meet for consultations next week. The clock is ticking, with Britain scheduled to leave the E.U. on March 29.
Thursday (March 21)
- 5:00 ECB Economic Bulletin
- All Day – EU Economic Summit
- 8:30 US Philly Fed Manufacturing Index. Estimate 4.6
- 8:30 Unemployment Claims. Estimate 226K
- 10:00 US CB Leading Index. Estimate 0.1%
- 10:30 US Natural Gas Storage. Estimate -49B
Friday (March 22)
- 4:30 German Flash Manufacturing PMI. Estimate 48.0
- 4:30 German Flash Services PMI. Estimate 54.8
- 5:00 Eurozone Flash Manufacturing PMI. Estimate 49.5
- 5:00 Eurozone Flash Services PMI. Estimate 52.7
- 5:00 Eurozone Current Account. Estimate 17.3B
*All release times are DST
*Key events are in bold
EUR/USD for Thursday, March 21, 2019
EUR/USD for March 21 at 5:15 DST
Open: 1.1413 High: 1.1438 Low: 1.1393 Close: 1.1404
EUR/USD ticked higher in the Asian session. The pair has reversed directions and headed lower in the European session
- 1.1300 is providing support
- 1.1434 is the next resistance line
- Current range: 1.1300 to 1.1434
Further levels in both directions:
- Below: 1.1300, 1.1212, 1.1120 and 1.1046
- Above: 1.1434, 1.1553 and 1.1610
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