EUR/USD – Euro Improves as Draghi Upbeat About Economy

The euro has posted gains in the Tuesday session. EUR/USD is trading at 1.1260, as the pair is up 0.70%. For a second straight day, there are no eurozone releases. Earlier in the day, ECB President Mario Draghi addressed the ECB Forum on Central Banking, and his upbeat comments pushed the euro higher. In the US, today’s key event is CB Consumer Confidence, which is expected to dip to 116.1.

ECB President Mario Draghi addressed the ECB Forum on Tuesday, and the markets liked what they were hearing, as the euro has improved to 2-week highs. Draghi acknowledged that economic indicators were showing a broadening recovery in the eurozone, and even had something positive to say about inflation, as he noted that “deflationary forces have been replaced by reflationary ones”. Draghi defended the bank’s loose accommodative policy, saying that it had pushed inflation higher, but stimulus was needed until inflation becomes “durable and self-sustaining”. Draghi’s message to the markets and his critics is that “we’re on the right path, but please show some patience”. Germany, the eurozone’s largest economy, wants to see a tighter policy, which is a better fit for the robust economy. Clearly however, the ECB under Draghi’s stewardship has no intentions of altering current policy until inflation moves closer to the ECB’s target of 2 percent.

The German economy is firing on all four cylinders, and the business sector remains optimistic, according to a key survey released on Monday. Ifo Business Climate hit a record high in June, climbing to 115.1. The indicator has improved for five consecutive months as optimism in the business sector continues to rise. Ifo chief Clemens Fuest said that the German business sector was in a “jubilant” mood, and said that he expected business conditions to continue to improve. Major economic institutes and the German central bank have revised upwards their forecast for German growth in 2017 and 2018. German GDP grew 0.6% in the first quarter, and the German locomotive has boosted growth in the eurozone. Analysts are closely monitoring how the ECB plans to respond to stronger economic conditions in the euro-area. So far, the central bank has dismissed calls to tighten monetary policy.

EUR Climbs as Draghi Praises Strengthening Recovery

EUR/USD Fundamentals

Tuesday (June 27)

• 4:00 ECB President Mario Draghi Speaks
• 9:00 US S&P/CS Composite-20 HPI. Estimate 5.9%
• 10:00 US CB Consumer Confidence. Estimate 116.1
• 10:00 US Richmond Manufacturing Index. Estimate 4 
• 11:15 US FOMC Member Patrick Harker Speaks
• 13:00 US Fed Chair Janet Yellen Speaks
• 17:30 US FOMC Member Neel Kashkari Speaks

Wednesday (June 28)

• 9:30 ECB President Mario Draghi Speaks
• 10:00 US Pending Home Sales. Estimate 0.9%
• 10:30 US Crude Oil Inventories. Estimate -2.1M

*All release times are EDT

*Key events are in bold

EUR/USD for Tuesday, June 27, 2017

EUR/USD Tuesday, June 27 at 5:45 EDT

Open: 1.1183 High: 1.1255 Low: 1.1179 Close: 1.1260

EUR/USD Technical

EUR/USD has inched higher in the Asian session and has posted considerable gains in European trade

• 1.1242 has switched to support following strong gains by EUR/USD in the European session
• 1.1366 is the next resistance line

Further levels in both directions:

• Below: 1.1242, 1.1122, 1.0985 and 1.0873
• Above: 1.1366, 1.1465 and 1.1534
• Current range: 1.1242 to 1.1366

OANDA’s Open Positions Ratio

EUR/USD ratio is showing slight gains in long positions. Currently, short positions have a majority (66%), indicative of EUR/USD reversing directions and moving lower.

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