EUR/USD – Euro Edges Higher Ahead of ECB Rate Announcement

EUR/USD has edged higher in the Thursday session. Currently, the pair is trading at 1.0550. On the release front, the ECB will set the benchmark rate, which is expected to remain at 0.00%. In the US, today’s key event is unemployment claims, with the markets expecting the indicator to climb to 239 thousand. On Friday, employment numbers will again be in the spotlight, with the release of Nonfarm Payrolls, Average Hourly Earnings and the unemployment rate.

With speculation heating up that the Federal Reserve will raise rates next week, the ECB’s policy meeting has almost fallen off the radar. The benchmark rate has been pegged at 0.00% since March 2016, and no change is expected at Thursday’s meeting. Inflation levels have finally moved higher and eurozone inflation is expected at 2.0% in February, meeting the central bank’s inflation target. ECB President Mario Draghi appears comfortable with current monetary policy, although the ECB could tighten its stance if growth and inflation levels continue to point upwards.

German numbers have been a mixed bag this week. Industrial Production gained 2.8%, its strongest gain since January 2016. Factory Orders plunged 7.4% in February, much worse than expected. Retail sales, the primary gauge of consumer spending, declined 0.8%, compared to an estimate of 0.2%. This marked a fifth decline of six releases, as the German consumer continues to hold tight to her purse strings. If data from Germany, the Eurozone’s largest economy, continues to point downwards, investors could get edgy and drag the euro south towards the 1.05 level.

The Federal Reserve waited an entire year to raise rates in December, but appears ready to make a March move. The odds of a March hike continue to climb, and are currently at 88% percent, according to the CME Group. Fed policymakers have been dropping hints of a March move, and a red-hot labor market and higher inflation levels present further arguments in favor of higher rates. Earlier in the year, the Fed had said that it wanted to wait until it had a clearer idea of President Trump’s economic policy before it tightened monetary policy. However, Trump has not backed up his promises to reform the tax code and increase fiscal spending with any details. Some Fed policymakers wanted to raise rates earlier this year, so Fed Chair Yellen is under pressure to make a move, and it appears virtually certain that the Fed will raise rates by a quarter-point on March 15.

ECB to Hold Awaiting Fed Move

ECB Unlikely to Rock the Boat Any Time Soon

EUR/USD Fundamentals

Thursday (March 9)

• 1:30 French Final Nonfarm Payrolls. Estimate 0.4%. Actual 0.4%
• Day 1 – ECOFIN Meetings
• 7:30 US Challenger Job Cuts
• 7:45 ECB Minimum Bid Rate. Estimate 0.00%
• 8:30 ECB Press Conference
• 8:30 US Unemployment Claims. Estimate 239K
• 8:30 US Import Prices. Estimate 0.1%
• 10:30 US Natural Gas Storage. Estimate -59B
• 13:01 US 30-y Bond Auction

Friday (March 10)

• 8:30 US Average Hourly Earnings. Estimate 0.3%
• 8:30 US Nonfarm Employment Change. Estimate 185K
• 8:30 US Unemployment Rate. Estimate 4.7%

*All release times are EST

*Key events are in bold

EUR/USD for Thursday, March 9, 2017

EUR/USD March 9 at 4:55 EST

Open: 1.0545 High: 1.0570 Low: 1.0525 Close: 1.0554

EUR/USD Technical

EUR/USD was flat in the Asian session and has recorded slight gains in European trade

• 1.0506 is providing support
• 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 showing slight gains in long positions. Currently, long positions have a majority (55%), indicative of a slight bias towards EUR/USD 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.