EUR/USD – Euro Unchanged as Eurozone, German Mfg. PMIs Within Expectations

The euro continues to have a quiet week, as EUR/USD trades just above the 1.09 line. On the release front, Eurozone and German Manufacturing PMIs pointed to expansion. The Eurozone report came in at 56.8, edging above the forecast of 56.7, while the German reading of 58.2 matched the estimate. There are no major US events on the schedule. On Wednesday, we’ll get a look at the German unemployment rate and Eurozone Preliminary Flash GDP. In the US, the Federal Reserve will release its policy statement. The other key releases are ADP Nonfarm Payrolls and ISM Non-Manufacturing PMI. 

The eurozone economy continues to expand, and more growth has meant more jobs and lower unemployment figures. Just a year ago, the eurozone unemployment rate was at 10.3%, but the rate has been steadily decreasing since then. In February, the rate dropped to 9.5%, and the March release is expected at 9.4%. Germany has led the way, with the unemployment rate dropping to 5.9% in February. Unemployment rolls continue to shrink in Germany, and the decline of 30,000 unemployed persons in February easily beat expectations. The March reading is expected to show another decline of 10,000. The markets will also be monitoring US employment numbers, which kick off on Wednesday with the release of ADP Nonfarm Payrolls. The indicator is expected to drop sharply to 178 thousand in March compared to 263 thousand a month earlier.

It’s been a rocky start for President Donald Trump, who just marked the 100-day milestone of his term in office. Trump’s popularity is at record lows for a new president, but he managed to avoid the embarrassment of a government shutdown, as lawmakers reached an agreement on the weekend. The short-term spending deal, which has bipartisan support, provides funding for government services until September 30th. The deal does not include any funding for a border wall with Mexico, marking a clear concession on the part of Trump. The White House is hoping that this small victory will be the prelude to more cooperation between the Republicans and Democrats on Capitol Hill, as Trump will need some support from the Democrats in order to pass tax reform legislation, one of Trump’s major campaign planks.

EUR/USD Fundamentals

Tuesday (May 2)

• 3:15 Spanish Manufacturing PMI. Estimate 54.3. Actual 54.5
• 3:45 Italian Manufacturing PMI. Estimate 55.9. Actual 56.2
• 3:50 French Final Manufacturing PMI. Estimate 55.1. Actual 55.1
• 3:55 German Final Manufacturing PMI. Estimate 58.2. Actual 58.2
• 4:00 Eurozone Final Manufacturing PMI. Estimate 56.8. Actual 56.7
• 4:00 Italian Monthly Unemployment Rate. Estimate 11.6%. Actual 11.7%
• 5:00 Eurozone Unemployment Rate. Estimate 9.4%. 
• All Day – US Total Vehicle Sales. Estimate 17.1M. 

Wednesday (May 3)

• 3:55 German Unemployment Rate. Estimate -10K
• 5:00 Eurozone Preliminary Flash GDP. Estimate 0.5%
• 8:15 US ADP Nonfarm Employment Change. Estimate 178K
• 10:00 ISM Non-Manufacturing PMI. Estimate 56.1
• 14:00 US FOMC Statement
• 14:00 US Federal Funds Rate. <1.00%

*All release times are EST

*Key events are in bold

EUR/USD for Tuesday, May 2, 2017

EUR/USD Monday, May 2 at 3:20 EST

Open: 1.0908 High: 1.0925 Low: 1.0901 Close: 1.0916

EUR/USD Technical

EUR/USD inched higher the Asian session and is flat in European trade

• 1.0873 remains a weak support level
• 1.0985 is the next line of resistance

Further levels in both directions:

• Below: 1.0873, 1.0708, 1.0616 and 1.0506
• Above: 1.0985, 1.1122 and 1.1242
• Current range: 1.0873 to 1.0985

OANDA’s Open Positions Ratio

EUR/USD ratio is unchanged this week. Currently, short positions have a majority (62%), indicative of EUR/USD breaking out and moving 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.