EUR/USD – Euro Steady as German CPI Matches Forecast

EUR/USD has edged lower in the Wednesday session. Currently, the pair is trading at 1.2365, down 0.20% on the day. On the release front, there are no eurozone or German indicators on the schedule. The US will release CPI and Core CPI, both of which are expected to slow to 0.2%. On Wednesday, ECB President Mario Draghi will speak at an ECB conference in Frankfurt and Germany releases Final CPI. The US will release key inflation and consumer spending reports.

Eurozone manufacturing indicators for January are pointing to contraction. Eurozone Industrial Change declined 1.0% in January, its sharpest drop since December 2016. The estimate stood at -0.4%. Last week, German numbers disappointed. Factory Orders in January plunged 3.9%, worse than the estimate of -1.9%. This marked the second decline in the past three months. This was followed by a decline of 0.1% from Industrial Production, marking a second straight decline. The reading was well off the forecast of 0.6%. The latest numbers are somewhat surprising as the German economy remains very strong, and has led the way as eurozone economy continues to expand.

The Federal Reserve is widely expected to raise interest rates next week. According to the CME Group, the odds of a quarter-point raise stand at 89 percent. What can we expect from the Fed during the year? The pressing question how many rate hikes we will in 2018? The current Fed projection remains at three hikes, but the superb nonfarm payrolls report last week has raised speculation that the Fed could accelerate the pace to four hikes, which would be good news for the US dollar. Investors will be keeping a close eye on key US data, especially inflation indicators. If these numbers improve, we’re likely to see four rate hikes in 2018.

 

EUR/USD Fundamentals

Wednesday (March 14)

• 3:00 German Final CPI. Estimate 0.5%. Actual 0.5%

• 4:00 ECB President Draghi Speaks

• 5:03 Italian Retail Sales. Estimate -0.1%. Actual -0.5%

• 6:00 Eurozone Employment Change. Estimate 0.3%. Actual 0.3%

• 6:00 Eurozone Industrial Production. Estimate -0.4%. Actual -1.0%

• Tentative – German 30-year Bond Auction

• 8:30 US Core Retail Sales. Estimate 0.4%

• 8:30 US PPI. Estimate 0.1%

• 8:30 US Retail Sales. Estimate 0.3%

• 8:30 US Core PPI. Estimate 0.2%

• 10:00 US Business Inventories. Estimate 0.6%

• 10:30 US Crude Oil Inventories. Estimate 2.2M

Thursday (March 15)

• 3:45 French Final CPI. Estimate -0.1%

• 8:30 US Empire State Manufacturing Index. Estimate 15.2

• 8:30 US Philly Fed Manufacturing Index. Estimate 23.2

• 8:30 US Unemployment Claims. Estimate 230K

Open: 1.2390 High: 1.2413 Low: 1.2361 Close: 1.2365

EUR/USD Technical

EUR/USD edged higher in the Asian session but has reversed directions and is moving downwards in European trade

• 1.2357 is under pressure in support. It could break during the Wednesday session

• 1.2460 is the next resistance line

Further levels in both directions:

• Below: 1.2357, 1.2286, 1.2200 and 1.2092

• Above: 1.2460, 1.2581 and 1.2660

• Current range: 1.2357 to 1.2460

OANDA’s Open Positions Ratio

EUR/USD ratio is showing little movement in the Wednesday session. Currently, short positions have a majority (61%), indicative of EUR/USD continuing to move 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.