EUR/USD has edged higher on Thursday, as the pair trades in the low-1.39 range in the European session. There are several major events on today's schedule, so traders can expect some movement from EUR/USD. The ECB has a policy meeting and the markets will be looking to see if the central bank announces any monetary moves. In the US, Federal Reserve chair Janet Yellen will continue her congressional testimony, as she speaks before the Senate Budget Committee. On the release front, German data continues to point downward, with a decline from Industrial Production. In the US, today's highlight is Unemployment Claims. The markets are expecting a strong improvement after last week's poor showing.
Federal Reserve Chair testified before Congress' Economic Joint Committee on Wednesday, and gave a cautious thumbs-up to the economic recovery. She said that the economy has improved, but pointed to two sore spots - the job market remains weak and inflation is below the Fed's target of 2%. Yellen stated that she therefore expects that low interest rate levels will continue for a "considerable time". Yellen has stated previously that slack remains in the economy, and the Fed is expected to proceed carefully with future trims to its QE scheme. Since December, the Fed has trimmed the asset-purchase program by almost half, cutting it to $45 billion each month.
Eurozone manufacturing data continues to disappoint, and of particular concern are weak figures from Germany, the Eurozone's number one economy. German Industrial Production came in at -0.5%, well off the estimate of +0.3%. Earlier in the week, German Factory Orders slipped 2.8%, its sharpest decline since October 2012. This was nowhere near the estimate of 0.3%. French Industrial Production also looked weak, posting a decline of -0.7%, short of the forecast of 0.3%.
The markets are keeping a close eye on Thursday's ECB policy meeting. Will the ECB announce any monetary moves? With inflation indicators pointing lower, ECB head Mario Draghi has stated that negative deposit rates or even QE are on the table, but the markets have heard this often before. However, with EUR/USD approaching the 1.40 line, Draghi will be under pressure to show that he is serious about tackling low inflation.
EUR/USD 1.3937 H: 1.3940 L: 1.3905
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