EUR/USD – Euro Dips Ahead of German CPI, Manufacturing Reports

EUR/USD is slightly lower in the Wednesday session. Currently, the pair is trading at 1.0540. It’s another full day on the release front, with a host of events in the eurozone and the US. Germany will release inflation, employment and manufacturing reports. The eurozone will also publish Manufacturing PMI. In the US, today’s highlight is the ISM Manufacturing PMI. On Thursday, the eurozone releases CPI reports, and the US will publish unemployment claims.

It could be a busy day for the euro, as Germany, the largest economy in Europe, releases a host of key indicators. After a decline in January, Preliminary CPI is expected to rebound with a gain of 0.6% in February. The markets are also expecting strong numbers from unemployment claims and Manufacturing PMI. Last week,  Ifo Business Climate improved to 111.0, beating the estimate of 109.6. The revised GDP posted a gain of 0.4% in the fourth quarter, unchanged from Preliminary GDP. If Wednesday’s releases meet expectations, the euro could respond with gains.

Currency markets showed muted reaction to President Trump’s speech to Congress on Tuesday. Trump promised “massive” tax relief for the middle class as well as corporate tax cuts. However, he failed to provide details or even timelines on tax reform or infrastructure spending, two themes which he has discussed since the election campaign. Trump stated that he will ask Congress to approve legislation for $1 trillion in infrastructure spending, “financed through both public and private capital”. Analysts noted that although Trump touched on the protectionist theme, such as the trade imbalance with China, his tone was less belligerent than we’ve seen in the past.

With Federal Reserve policymakers continuing to sound hawkish about a rate move, the US dollar could make some headway against the euro and other major currencies. On Tuesday, FOMC members William Dudley and John Williams both hinted at an imminent hike by the Fed, which raised the odds of a March hike at 66%, according to Reuters. Dudley said the case for a hike is compelling, while Williams noted that a rate increase will be up for “serious consideration” at the March policy meeting. The markets will be listening closely to speeches from other FOMC members this week, culminating in speeches from Janet Yellen and Fed Governor Stanley Fischer on Friday.

USD Surges as Markets Back March Fed Rate Hike

Trump Blows Trumpet But Is Light On Detail (Again)

EUR/USD Fundamentals

Wednesday (March 1)

• All Day – German Preliminary CPI. Estimate 0.6%
• 3:15 Spanish Manufacturing PMI. Estimate 55.9. Actual 54.8
• 3:45 Italian Manufacturing PMI. Estimate 53.6
• 3:50 French Final Manufacturing PMI. Estimate 52.3
• 3:55 German Unemployment Change. Estimate -10K
• 3:55 German Final Manufacturing PMI. Estimate 57.0
• 4:00 Eurozone Final Manufacturing PMI. Estimate 55.5
• Tentative – German 10-year Bond Auction
• 8:30 US Core PCE Price Index. Estimate 0.3%
• 8:30 US Personal Spending. Estimate 0.3%
• 8:30 US Personal Income. Estimate 0.3%
• 9:45 US Final Manufacturing PMI. Estimate 54.4
• 10:00 US ISM Manufacturing PMI. Estimate 56.2
• 10:00 US Construction Spending. Estimate 0.7%
• 10:00 US ISM Manufacturing Prices. Estimate 68.5
• 10:30 US Crude Oil Inventories. Estimate 1.5M
• All Day – US Total Vehicle Sales. Estimate 17.7M
• 13:00 US FOMC Member Robert Kaplan Speech
• 14:00 US Beige Book
• 18:00 US FOMC Member Lael Brainard Speech

Upcoming Key Events

Thursday (March 2)

• 5:00 Eurozone CPI Flash Estimate. Estimate 1.8%
• 5:00 Eurozone Core CPI Flash Estimate. Estimate 0.9%
• US Unemployment Claims. Estimate 243K

*All release times are EST

*Key events are in bold

EUR/USD for Wednesday, March 1, 2017

EUR/USD March 1 at 4:10 EST

Open: 1.0568 High: 1.0589 Low: 1.0525 Close: 1.0538

EUR/USD Technical

EUR/USD was flat in the Asian session and has recorded small losses in European trade

• 1.0506 is a weak support line
• 1.0616 is the next resistance line

Further levels in both directions:

• Below: 1.0506, 1.0414 and 1.0333
• Above: 1.0616, 1.0708, 1.0873 and 1.0985
• Current range: 1.0506 to 1.0616

OANDA’s Open Positions Ratio

EUR/USD ratio is unchanged in the Wednesday session. Currently, long positions have a majority (53%), indicative of trader bias towards the euro reversing directions and moving higher.

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.