EUR/USD – Euro climbs to 3-week high, German CPI next

EUR/USD has climbed higher in the Thursday session. Currently, the pair is trading at 1.1419, up 0.42% on the day. In the eurozone, the focus is on German CPI, which is expected to rebound with a gain of 0.5%. In the U.S., Advance GDP is projected at 2.2%, after a gain of 2.3% in the fourth quarter. Chicago PMI is expected to rise to 57.3 and unemployment claims is forecast to rise to 221 thousand. Friday will also be busy. Germany releases retail sales and manufacturing PMI, while the eurozone releases CPI estimates. In the U.S., we’ll get a look at ISM Manufacturing PMI and the UoM Consumer Sentiment.

The ECB has finally terminated its massive stimulus program, but any speculation that the bank will raise rates in the near term appears remote. The ECB has held rates at a flat 0.00% since March 2016, and there are two main factors weighing on a rate hike. First, the eurozone economy is grappling with a slowdown, and the German locomotive has also posted sluggish numbers. As well, inflation levels remain well shy of the ECB target of 2 percent. Unless the economic conditions show a sharp improvement, we may not see a rate hike before 2020.

The Federal Reserve is in dovish mode, and this stance was reinforced by Fed Chair Powell’s testimony on Capitol Hill on Tuesday and Wednesday. Powell preached patience with regard to changes in interest rate levels. The Fed chair stated that the Fed was in “no rush to make a judgment” and made reference to “conflicting signals in the economy”. The labor picture remains bright, with strong hiring and low unemployment. At the same time, consumer spending and business investment have been soft. Powell was optimistic about the U.S. economy, but said that the lower global growth and uncertainty over trade was weighing on the economy. The markets are expecting the Fed to remain on the sidelines in May and June, meaning that the first hike of 2019 may be on hold until the second half of the year.

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EUR/USD Fundamentals

Thursday (February 28)

• 2:00 German Import Prices. Estimate 0.2%. Actual -0.2%
• All Day – German Preliminary CPI. Estimate 0.5%
• 2:45 French Consumer Spending. Estimate 1.1%. Actual 1.2%
• 2:45 French Preliminary CPI. Estimate 0.4%. Actual 0.0%
• 2:45 French Preliminary GDP. Estimate 0.3%. Actual 0.3%
• 3:00 Spanish Flash CPI. Estimate 1.1%. Actual 1.1%
• 5:00 Italian Preliminary CPI. Estimate 0.2%. Actual 0.2%
  8:00 US FOMC Member Clarida Speaks
• 8:30 US Advance GDP. Estimate 2.2%
• 8:30 US Advance GDP Price Index. Estimate 1.7%
• 8:30 US Unemployment Claims. Estimate 221K
• 9:45 US Chicago PMI. Estimate 57.3
• 10:30 US Natural Gas Storage.  Estimate -172B
• 20:15 US Fed Chair Powell Speaks

Friday (March 1)

• 2:00 German Retail Sales. Estimate 1.9%
• 3:55 German Final Manufacturing PMI. Estimate 47.6
• 3:55 German Unemployment Change. Estimate -5K
• 4:00 Eurozone Final Manufacturing PMI. Estimate 49.2
• 5:00 Eurozone CPI Flash Estimate. Estimate 1.5%
• 5:00 Eurozone Core CPI Flash Estimate. Estimate 1.1%
• 10:00 US ISM Manufacturing PMI. Estimate 55.6
• 10:00 US UoM Consumer Sentiment. Estimate 95.8

*All release times are EST

*Key events are in bold

EUR/USD for Thursday, February 28, 2019

EUR/USD for February 28 at 6:05 EST

Open: 1.1370 High: 1.1419 Low: 1.1367 Close: 1.1418

EUR/USD Technical

EUR/USD was flat for most of the Asian session and has posted gains in European trade

• 1.1300 is providing support
• 1.1434 is under pressure in resistance as EUR/USD continues to move higher
• Current range: 1.1300 to 1.1434

Further levels in both directions:

• Below: 1.1300, 1.1212, 1.1120 and 1.1046
• Above: 1.1434, 1.1553 and 1.1685

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