EUR/USD – Steady as Eurozone Inflation Hits 2.0%

EUR/USD is almost unchanged in the Thursday session. Currently, the pair is trading at 1.0520. On the release front, Eurozone CPI Flash Estimate jumped to 2.0%, beating the forecast of 1.8%. Later in the day, the US releases unemployment claims, which is expected at 243 thousand, little changed from the previous release. On Wednesday, German Preliminary CPI posted a gain of 0.6%, matching the forecast.

Currency markets showed muted reaction to President Trump’s speech to Congress on Tuesday. Trump promised “massive” tax relief for the middle class as well as corporate tax cuts. However, he failed to provide details or even timelines on tax reform or infrastructure spending, two themes which he has discussed since the election campaign. Trump stated that he will ask Congress to approve legislation for $1 trillion in infrastructure spending, “financed through both public and private capital”. Analysts noted that although Trump touched on the protectionist theme, such as the trade imbalance with China, his tone was less belligerent than we’ve seen in the past.

With Federal Reserve policymakers continuing to sound hawkish about a rate move, the US dollar could make some headway against the euro and other major currencies. On Tuesday, FOMC members William Dudley and John Williams both hinted at an imminent hike by the Fed, which raised the odds of a March hike at 66%, according to Reuters. Dudley said the case for a hike is compelling, while Williams noted that a rate increase will be up for “serious consideration” at the March policy meeting. The markets will be listening closely to speeches from other FOMC members this week, culminating in speeches from Janet Yellen and Fed Governor Stanley Fischer on Friday.

Trump Blows Trumpet But Is Light On Detail (Again)

EUR/USD Fundamentals

Thursday (March 2)

• 2:00 German Import Prices. Estimate 0.5%. Actual 0.9%
• 3:00 Spanish Unemployment Rate. Estimate 5.2K. Actual -9.4K
• 4:00 Italian Monthly Unemployment Rate. Estimate 12.0%. Actual 11.9%
• 4:44 Spanish 10-y Bond Auction. Actual 1.68%
• 4:59 French 10-y Bond Auction. Actual 0.91%
• 5:00 Eurozone CPI Flash Estimate. Estimate 1.8%. Actual 2.0%
• 5:00 Eurozone Core CPI Flash Estimate. Estimate 0.9%. Actual 0.9%
• 5:00 Eurozone PPI. Estimate 0.5%. Actual 0.7%
• 5:00 Eurozone Unemployment Rate. Estimate 9.6%. Actual 9.6%
• 8:30 US Unemployment Claims. Estimate 243K
• 10:30 US Natural Gas Storage. Estimate -5B

*All release times are EST

*Key events are in bold

EUR/USD for Thursday, March 2, 2017

EUR/USD March 1 at 6:35 EST

Open: 1.0535 High: 1.0546 Low: 1.0522 Close: 1.0523

EUR/USD Technical

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

• 1.0506 is a weak support line
• 1.0616 is the next 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 showing slight gains in long positions. Currently, long positions have a majority (56%), indicative of trader bias towards the euro reversing directions 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.