EUR/USD – Euro unchanged, investors eye FOMC minutes

EUR/USD is showing little movement on Wednesday, after posting gains in the previous two days. Currently, the pair is trading at 1.1339, down 0.02% on the day. It’s a light day for fundamentals, with no major events. In Germany, PPI rebounded with a gain of 0.4%, beating the estimate of -0.2%. Later in the day, eurozone consumer confidence is expected to post a second straight loss of -8 points. There are no data releases out of the U.S., but investors will be keeping a close eye on the Federal Reserve minutes from the January meeting. Thursday will be much busier. Germany and the eurozone will publish PMIs and the U.S. releases durable goods and unemployment claims.

If recent comments out of the Fed are any indication, the minutes from the January policy meeting are likely to be dovish. The Fed has sent signals that it will ease up on rate policy this year, after aggressively raising rates four times in 2018. The January rate statement had a decidedly dovish tone, as policymakers discarded previous pledges of “further gradual increases” in interest rates, and said it would be “patient” before any further hikes. The current Fed projection calls for two rate hikes this year, but that is subject to change, based on the strength of the U.S. economy. The markets have priced in a hold on rates for the near-term, with little expectation of a rate hike in the first half of the year.

With the eurozone and Germany experiencing an economic slowdown, it’s no surprise that investors and analysts are pessimistic about the economic outlook. The ZEW economic sentiment surveys remained mired in deep freeze in February, with scores deep in negative territory. Still, there was a silver lining in the German release, as the readings have improved steadily over the past four months – back in October, the score was -24.7 points. In the first quarter of 2018, the readings were in positive territory, as the German economy was performing well. However, optimism then dissipated, as the global trade war intensified and the German economy slowed. It has been a similar story with the eurozone, as ZEW economic sentiment scores have been in negative territory since the second half of 2018.

A golden day for sterling

Yen weakens on delayed reaction to Kuroda

 

EUR/USD Fundamentals

• 2:00 German PPI. Estimate -0.2%. Actual 0.4%

• 10:00 Eurozone Consumer Confidence. Estimate -8

• 14:00 US FOMC Meeting Minutes

• 2:00 German Final CPI. Estimate -0.8%

• 3:30 German Flash Manufacturing PMI. Estimate 50.0

• 3:30 German Flash Services PMI. Estimate 52.8

• 4:00 Eurozone Flash Manufacturing PMI. Estimate 50.3

• 4:00 Eurozone Flash Services PMI. Estimate 51.5

• 7:30 ECB Monetary Policy Meeting Accounts

• 8:30 US Core Durable Goods Orders. Estimate 0.2%

• 8:30 US Durable Goods Orders. Estimate 0.8%

• 8:30 US Philly Fed Manufacturing Index. Estimate 15.6

• 8:30 US Unemployment Claims. Estimate 220K

Open: 1.1341 High: 1.1359 Low: 1.1332 Close: 1.1339

 

EUR/USD Technical

EUR/USD has showed limited 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 1.1685