EUR/USD – Euro Steady Ahead of FOMC Statement

EUR/USD is steady on Wednesday. The pair has gained close to 100 points this week, and is trading at the 1.13 line in the European session. In economic news, German Consumer Climate improved to 9.7 points, beating the estimate. Today’s highlight is the FOMC Statement, with the Fed expected to maintain the benchmark interest rate of 0.25%. As well, the US releases Pending Home Sales.

German key releases are closely watched by the markets, as Germany is the largest economy in the Eurozone. German Consumer Climate climbed to 9.7 points in April, above the estimate of 9.5 points. This marked the indicator’s highest level since August 2015, and points to stronger consumer confidence, which usually translates into increased consumer spending. We’ll get a look at German CPI and Retail Sales later in the week.

Last week, the ECB remained on the sidelines at its April policy meeting, leaving the benchmark interest rate at a record low of zero. The spotlight shifts to the Federal Reserve on Wednesday, which will release its monthly policy statement. The Fed is widely expected to maintain interest rates at the current level of 0.25%. The markets will be carefully monitoring the tone of the policy statement. Janet Yellen has sounded cautious about the health of the US economy, and if the Fed continues on this path and sends out a dovish message, the dollar could soften against its major rivals. At the same time, any clues about a June rate hike could bolster the greenback.

The US economy continues to expand, but there are some weak spots, including the manufacturing sector. Core Durable Goods dropped 0.2%, well off the estimate of a 0.6% gain. This marked the fourth decline in five months. Durable Goods Orders was stronger at 0.8%, but also missed expectations, as the estimate stood at 1.9%. Recent manufacturing reports, such as the Philly Fed Mfg. Index have also been soft, as the industry has been hard-hit by weak global demand and a downturn in the US oil industry due to low crude prices.

EUR/USD Fundamentals

Wednesday (April 27)

  • 6:00 German Import Prices. Estimate 0.3%. Actual 0.7%
  • 6:00 GfK German Consumer Climate. Estimate 9.5. Actual 9.7
  • 8:00 Eurozone M3 Money Supply. Estimate 5.0%. Actual 5.0%
  • 8:00 Eurozone Private Loans. Estimate 1.7%. Actual 1.6% 
  • Tentative – German 30-year Bond Auction
  • 12:30 US Goods Trade Balance. Estimate -62.5B
  • 14:00 US Pending Home Sales. 0.3%
  • 14:30 US Crude Oil Inventories. Estimate 1.4M
  • 18:00 US FOMC Statement
  • 18:00 US Federal Funds Rate. Estimate <0.50%

Upcoming Key Events

Thursday (April 28, 2016)

  • 8:30 US Advance GDP. Estimate 0.7%.
  • 8:30 US Unemployment Claims. Estimate 258K

*Key events are in bold

*All release times are GMT

EUR/USD for Wednesday, April 27, 2016

EUR/USD April 27 at 10:00 GMT

Open: 1.1296 Low: 1.1291 High: 1.1333 Close: 1.1306

EUR/USD Technical

S1 S2 S1 R1 R2 R3
1.1087 1.1172 1.1278 1.1378 1.1495 1.1609
  • EUR/USD was flat in the Asian session. The pair has shown some choppiness in the European trade
  • 1.1278 is providing weak support
  • There is resistance at 1.1378

Further levels in both directions:

  • Below: 1.1278, 1.1172, 1.1087 and 1.0989
  • Above: 1.1378, 1.1495 and 1.1609
  • Current range: 1.1278 to 1.1378

OANDA’s Open Positions Ratio

EUR/USD ratio shows short positions with a strong majority (61%). This is indicative of strong trader bias towards EUR/USD reversing directions and moving lower.

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 and macroeconomic analysis, Kenny Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in major online financial publications including, Seeking Alpha and FXStreet. Kenny has been a MarketPulse contributor since 2012.