EUR/USD – Euro Ticks Lower as German Manufacturing PMI Softens

The euro has posted small losses in the Wednesday session. Currently, the pair is trading at 1.2317, down 0.16% on the day. On the release front, German and Eurozone Manufacturing PMIs slowed in January. The German PMI dipped to 60.3, shy of the estimate of 60.6 points. It was a similar story with the Eurozone PMI, which dropped to 58.5, shy of the estimate of 59.2 points. In the US, the key event is the Federal Reserve minutes from the January meeting. The US will release Existing Home Sales, which are expected to climb to 5.61 million.

The Federal Reserve will be in the spotlight on Wednesday, with the release of the minutes from the January meeting, the last to have been chaired by Janet Yellen. The markets will be looking for hints regarding future rate policy, and any inkling of plans to raise interest rates more than three times in 2018 could trigger volatility in the currency markets as well as stock markets. Recent US numbers have been strong, and inflation indicators have been pointing upwards. This has raised concerns that the Fed may accelerate its pace of hikes, which triggered a sharp correction in global stock markets. The new chair of the Fed, Jerome Powell has tried to reassure the markets that the Fed is monitoring the situation, but it’s doubtful that the Fed can do much to prevent volatility in the markets.

Bitcoin, the most popular virtual currency, has shown sharp volatility in the past year, fluctuating between $900 and $19,000. These wild swings have drawn the attention of policymakers and lawmakers, as there are growing concerns that virtual currencies could have a negative economic impact. France and Germany want to put virtual currencies on the agenda at the next G-20 meeting, and there is bipartisan support in Congress to adopt new rules to regulate virtual currencies. However, Draghi poured cold water on any ECB involvement, saying that it was not the ECB’s responsibility to ban or regulate Bitcoin. Draghi added that the ECB was exploring the use of blockchain, a digital technology to monitor bitcoin transactions.

EUR/USD Fundamentals

Wednesday (February 21)

• 3:00 French Flash Manufacturing PMI. Estimate 58.1. Actual 56.1
• 3:00 French Flash Services PMI. Estimate 59.1. Actual 57.9
• 3:30 German Flash Manufacturing PMI. Estimate 60.6. Actual 60.3
• 4:00 German Flash Services PMI. Estimate 56.9. Actual 55.3
• 4:00 Eurozone Flash Manufacturing PMI. Estimate 59.2. Actual 58.5
• 4:00 Eurozone Flash Services PMI. Estimate 57.7. Actual 56.7
• 9:45 US Flash Manufacturing PMI. Estimate 55.4
• 9:45 US Flash Services PMI. Estimate 53.8
• 10:00 US Existing Home Sales. Estimate 5.61M
• 14:00 US FOMC Meeting Minutes

*All release times are GMT

*Key events are in bold

EUR/USD for Wednesday, February 21, 2018

EUR/USD for February 21 at 7:00 EDT

Open: 1.2337 High: 1.2345 Low: 1.2308 Close: 1.2318

EUR/USD Technical

EUR/USD inched lower in the Asian session and is choppy European trade

• 1.2286 is providing support
• 1.2357 is the next resistance line

Further levels in both directions:

• Below: 1.2286, 1.2200 and 1.2092
• Above: 1.2357, 1.2481, 1.2569 and 1.2660
• Current range: 1.2286 to 1.2357

OANDA’s Open Positions Ratio

EUR/USD ratio is almost unchanged in the Wednesday session. Currently, short positions have a majority (58%), indicative of EUR/USD continuing to move 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.