EUR/USD – Euro Steady Ahead of US GDP, Trump Speech

EUR/USD is almost unchanged in the Tuesday session. Currently, the pair is trading at 1.0590. On the release front, there are no major events in the eurozone. In the US, Preliminary GDP is expected at 2.1%. As well, CB Consumer Confidence is forecast to dip to 111.3 points. As well, President Donald Trump will address a joint session of Congress. On Wednesday, Germany releases three key events, led by Preliminary CPI. The US will publish ISM Manufacturing PMI.

Eurozone indicators were mixed on Monday. M3 Money Supply, which measures growth in the amount of money circulating in the eurozone, slowed to 4.8%, down from 5.0% a month earlier. This indicator is closely watched, as it often predicts economic activity. There was more positive news from bank lending to households, which improved for a third straight month, rising to 2.2% in January. Credit levels have been moving upwards since 2015, but have only recently shown strong gains. With inflation indicators also pointing upward, the ECB’s stimulus program could finally be producing results. The central bank last took action in December, when it extended its asset-purchase program for six months until December 2017, but reduced purchases from EUR 80 billion to 60 billion/mth. If Eurozone indicators continue to indicate modest growth, the ECB is unlikely to tinker with the asset-purchase program.

President Trump will deliver his first major speech on Tuesday, as he delivers remarks to a joint session of Congress. Although it is not officially a State of the Union address, the speech could have huge ramifications for the financial markets. Since Trump’s election win, the stock markets are sharply higher and the US dollar has jumped 3.7% against the euro, but the greenback has lost ground since Trump has become president. It’s crunch time, as the markets want to hear some details about Trump’s economic agenda. Trump recently promised to unveil a “phenomenal” tax reform package and significant spending on infrastructure, but hasn’t provided any details. Tuesday’s speech marks a critical opportunity for the new administration, which is still trying to find its bearings after a rocky first month. If Trump fails to present specifics in terms of numbers or at least some timelines, market sentiment will likely sour and this could hurt the US dollar.

Week Ahead Dollar Mixed as Trump Pro-Growth Policies Remain Vague

The Clash of the Titans

EUR/USD Fundamentals

Tuesday (February 28)

• 2:45 French Consumer Spending. Estimate 0.6%. Actual 0.6%
• 2:45 French Preliminary CPI. Estimate 0.4%. Actual 0.1%
• 2:45 French Preliminary GDP. Estimate 0.4%. Actual 0.4%
• 5:00 Italian Preliminary CPI. Estimate 0.1%
• 8:30 US Preliminary GDP. Estimate 2.1%
• 8:30 US Goods Trade Balance. Estimate -66.0B
• 8:30 US Preliminary GDP Price Index. Estimate 2.1%
• 8:30 US Preliminary Wholesale Inventories. Estimate 0.5%.
• 9:00 US S&P/CS Composite-20 HPI. Estimate 5.3%
• 9:45 US Chicago PMI. Estimate 53.2
• 10:00 US CB Consumer Confidence. Estimate 111.3
• 10:00 US Richmond Manufacturing Index. Estimate 10
• 21:00 President Trump Speech

Upcoming Key Events

Wednesday (March 1)

• All Day – German Preliminary CPI. Estimate 0.6%
• 3:55 German Unemployment Change. Estimate -10K
• 3:55  German Final Manufacturing PMI. Estimate 57.0
• 4:00 Eurozone Final Manufacturing PMI. Estimate 55.5
• 10:00 US ISM Manufacturing PMI. Estimate 56.2

*All release times are EST

*Key events are in bold

EUR/USD for Tuesday, February 28, 2017

EUR/USD February 28 at 4:45 EST

Open: 1.0584 High: 1.0603 Low: 1.0567 Close: 1.0586

EUR/USD Technical

EUR/USD edged higher in the Asian session and has retracted in European trade

• 1.0506 is providing support
• 1.0616 remains a weak resistance line

Further levels in both directions:

• Below: 1.0506, 1.0414 and 1.0333
• Above: 1.0616, 1.0708, 1.0873 and 1.0985
• Current range: 1.0506 to 1.0616

OANDA’s Open Positions Ratio

EUR/USD ratio is unchanged in the Tuesday session. Currently, long positions have a majority (54%), indicative of trader bias towards the euro breaking out and moving higher.

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.