EUR/USD – Euro Climbs to 3-week High, FOMC Rate Announcement Next

EUR/USD has edged higher in the Wednesday session, following strong gains on Tuesday. Currently, the pair is trading at 1.1080, its highest level in three weeks. On the release front, German Unemployment declined by 13 thousand, easily beating the forecast of 0.0 thousand. Manufacturing PMI reports were mixed, as the German reading of 55.0 almost matched the forecast, but the Eurozone reading of 53.5 missed expectations. In the US, we’ll get at a look at ADP Nonfarm Employment, with an estimate of 166 thousand. The FOMC will conclude its policy meeting and is expected to maintain the benchmark interest rate at 0.25 percent.

On Tuesday, Eurozone GDP and inflation releases matched their forecasts. Preliminary Flash GDP climbed 0.3% in the third quarter, unchanged from the previous quarter. This matched the estimate. The Eurozone economy has not been particularly strong, but on the positive side, the economy doesn’t appear to have lost ground due to the Brexit vote back in June. Still, the markets remain nervous about Brexit fallout, and negotiations between Britain and the EU are expected to be lengthy and arduous. Eurozone Flash Estimate CPI gained 0.5% in October, the highest gain we’ve since June 2014. The improvement in inflation means that the ECB has some breathing room and may opt to hold off from further monetary easing, as it did at the policy meeting in late October.

In the US, all eyes are on the Federal Reserve, which concludes a 2-day policy meeting on Wednesday. The markets are expecting the Fed to remain on the sidelines, given there is less than a week before the US presidential election. The rate statement will be carefully monitored, as analysts comb for hints about the extent of support among FOMC members ahead of the crucial December meeting. There was positive news from the US consumer front on Monday, as Personal Spending rebounded with a 0.5% gain in September, after a flat reading of 0.0% in August. Gold responded to the reading with slight losses. This release comes on the heels of a disappointing consumer spending report on Friday, as UoM Consumer Sentiment fell to 87.2 points in October, below expectations and dropping to its lowest level since August 2015.

EUR/USD Fundamentals

Wednesday (November 2)

• 8:15 Spanish Manufacturing PMI. Estimate 52.7. Actual 53.3
• 8:45 Italian Manufacturing PMI. Estimate 51.5. Actual 50.9
• 8:50 French Final Manufacturing PMI. Estimate 51.3. Actual 51.8
• 8:55 German Unemployment Change. Estimate 0K. Actual -13K
• 8:55 German Final Manufacturing PMI. Estimate 55.1. Actual 55.0
• 9:00 Eurozone Final Manufacturing PMI. Estimate 55.3. Actual 53.5
• Tentative – German 10-year Bond Auction
• 12:15 US ADP Nonfarm Employment Change. Estimate 166K
• 14:30 US Crude Oil Inventories. Estimate 1.6M
• 14:00 US FOMC Statement
• 14:00 US FOMC Federal Funds Rate. Estimate <0.50%. Actual <0.50%

*All release times are EDT

* Key events are in bold

EUR/USD for Wednesday, November 2, 2016

EUR/USD November 2 at 10:35 GMT

Open: 1.1055 High: 1.1099 Low: 1.1049 Close: 1.1076

EUR/USD Technical

• EUR/USD was flat in the Asian session and has posted slight gains in the European session
• 1.1054 is a weak support level
• There is resistance at 1.1150

Further levels in both directions:

• Below: 1.1054, 1.0957, 1.0821 and 1.0708
• Above: 1.1150, 1.1278 and 1.1366
• Current range: 1.1054 to 1.1150

OANDA’s Open Positions Ratio

EUR/USD ratio showed movement towards short positions, following strong gains by EUR/USD on Tuesday, which resulted in long positions being covered. Currently, long and short  positions are an even split, indicative of a lack of trader bias  as to what direction EUR/USD will take next.

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.