EUR/USD – Euro drifting ahead of Federal Reserve rate statement

It continues to be an uneventful week for EUR/USD. The pair is unchanged on Wednesday, trading at 1.1353, up 0.02% on the day. On the release front, German PPI declined by 0.1%, shy of the estimate of 0.2%. This marked the second decline in three months. The Federal Reserve releases its monthly rate statement. On Thursday, the E.U. holds an economic summit. The U.S. will release the Philly Fed Manufacturing Index and unemployment claims.

The Federal Reserve is virtually certain to hold the benchmark rate at the Wednesday meeting, but traders should nonetheless treat the meeting as a market-mover. Policymakers have been sending out dovish messages, and if the Fed reaffirms that it will remain cautious and patient, the dollar could lose ground. The Fed’s balance sheet will also be under scrutiny, with the policymakers expected to announce when they will stop reducing the $4 billion balance sheet. The central bank has been reducing assets by $50 billion a month, but there has been criticism that this tightening is choking economic growth. The Fed will also publish its new dot plot, a quarterly release which is used to convey its interest rate outlook.

European leaders will 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 right away and would meet for consultations next week. The clock is ticking, with Britain scheduled to leave the E.U. on March 29.

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EUR/USD Fundamentals

Wednesday (March 20)

• 3:00 German PPI. Estimate 0.2%. Actual -0.1%

• 10:30 US Crude Oil Inventories. Estimate 0.5M

• 14:00 US FOMC Economic Projections

• 14:00 US FOMC Statement

• 14:00 US Federal Funds Rate. Estimate <2.50%

• 14:00 US FOMC Press Conference

Thursday (March 21)

• All Day – EU Economic Summit

• 8:30 US Philly Fed Manufacturing Index. Estimate 4.6

• 8:30 Unemployment Claims. Estimate 226K

Open: 1.1351 High: 1.1357 Low: 1.1336 Close: 1.1353

 

EUR/USD Technical

EUR/USD has showed little movement in the Asian and European sessions

• 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