EUR/USD – Euro Remains Subdued, US Mfg., Jobless Reports Next

The euro is steady on Thursday, as the pair trades at 1.1130 in the European session. On the release front, Eurozone Current Account dipped to EUR 25.5 billion, but this was above expectations. The ECB released a summary of its recent policy meeting. Over in the US, we’ll get a look at two key indicators – Philly Fed Manufacturing Index and Unemployment Claims.

ECB head Mario Draghi appeared before a European Parliament economic committee on Tuesday, and hinted that the ECB was ready to act if necessary. Draghi said that the ECB was “ready to do its part”, to combat persistently low inflation levels which have gripped the Eurozone. Although Draghi didn’t really add anything new, his comments were welcome news to jittery markets, which are banking on Draghi making significant moves at the ECB’s policy meeting in March. Such measures could include reducing interest rates into negative territory and expanding the current quantitative easing program, which currently stands at 60 billion euros/month. These monetary moves would likely see the euro soften against the dollar. However, there is always the possibility that the ECB will disappoint the markets by keeping its hands folded and doing nothing. This is what occurred during the December policy meeting – the markets were expecting action, but instead the ECB fiddled on the sidelines and failed to deliver, and the euro responded with huge gains. 

The Federal Reserve released the minutes of its January policy meeting on Wednesday. At that meeting, the Fed held rates at 0.25%, after raising rates in December for the first time in almost 10 years. The minutes reiterated the central bank’s concern that turmoil in global markets could have negative repercussions for the US economy. Policymakers sent out a broad hint that a rate hike is unlikely in March, as they discussed “altering their earlier views of the appropriate path for the target range for the federal funds rate”. This could have a negative impact on the US dollar, as investors may look elsewhere to park funds if US rates are not moving higher anytime soon. Federal Reserve chair Janet Yellen said last week that the Fed still planned to raise rates later in 2016, and this was reiterated on Wednesday by FOMC member Neel Kashkari, who said that a March rate hike was on the table, provided that the economy improved and inflation firmed. Still, a growing number of market players are skeptical that the Fed will make any moves before next year. Back in the heady days of December, the Fed hinted at a series of rate hikes during 2016, but the turmoil in the financial markets and the downturn in the US economy in early 2016 has quickly dampened expectations of a rate move.

Thursday (Feb. 18)

• 4:00 Eurozone Current Account. Estimate 22.3B. Actual 25.5B
• 7:30 ECB Monetary Policy Meeting Accounts
• 8:30 US Philly Fed Manufacturing Index. Estimate -2.9 points
• 8:30 US Unemployment Claims. Estimate 275K
• 10:00 US CB Leading Index. Estimate -0.1%
• 10:30 US Natural Gas Storage. Estimate -154B
• 11:00 US Crude Oil Inventories. Estimate 3.2M

Upcoming Key Events

Friday (Feb. 19)

• 8:30 US CPI. Estimate -0.1%
• 8:30 US Core CPI. Estimate +0.2%

*Key events are in bold

*All release times are EST

EUR/USD for Thursday, February 18, 2016

EUR/USD February 18 at 5:50 EST

Open: 1.1120 Low: 1.1119 High: 1.1150 Close: 1.1125

EUR/USD Technical

• EUR/USD has shown marginal movement in the Asian and European sessions
• There is resistance at 1.1172
• 1.1087 is providing support
• Current range: 1.1087 to 1.1172

Further levels in both directions:

• Below: 1.1087, 1.0941 and 1.0847
• Above: 1.1172, 1.1278, 1.1349 and 1.1495

OANDA’s Open Positions Ratio

EUR/USD ratio is almost unchanged, consistent with the lack of movement from EUR/USD. Short positions retain a strong majority of positions (57%). This points to trader bias towards the euro losing 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.