EUR/USD – Euro Flat in Thin Holiday Trade

EUR/USD is flat on Monday, as the pair trades at 1.1170 in the European session. Eurozone markets are closed for the Easter Monday holiday, so we’re unlikely to see much movement from the pair during the day. In the US, today’s highlight is Pending Home Sales. The markets are expecting the indicator to bounce back with a strong gain of 1.2 percent. We’ll also get a look at two consumer spending indicators – Core PCE Price Index and Personal Spending.

US Final GDP for the fourth quarter beat expectations, supported by a climb in household spending, a key driver of economic growth. The fourth quarter gain of 1.4 percent was lower than the 2.0 percent gain in Q3, but beat the estimate of 1.0%. With the global slowdown taking a bite out of US exports, strong consumer spending has been the engine behind the economy’s growth. The economy grew at a pace of 2.0 percent in 2015, identical to the figure of 2014. What can we expect for the first quarter of 2016? The financial markets were in turmoil in the early weeks of the year, so GDP in Q1 will be hard-pressed to post similar numbers.

US durable reports in February pointed to a manufacturing sector which continues to struggle. Core Durable Goods Orders posted a decline of 1.0%, well short of the forecast of a 0.2% drop. This marked the indicator’s third decline in four months. Durable Goods Orders was even worse, with a reading of -2.8%, slightly above the estimate of -3.0%. This slowdown is reflective of weak global demand, which has had a strong negative impact on the manufacturing sectors of developed economies worldwide, including the US.

A flurry of hawkish statements from Federal Reserve members last week resulted in broad gains for the dollar, which gained 150 points last week against the euro. After a dovish policy statement from the Fed, a market hike did not seem likely until before June. The markets have quickly changed this assessment, with some Fed officials calling for an April hike. Fed chair Janet Yellen will make a speech in New York on Tuesday, and the dollar could jump if Yellen does not rule out an April move.

EUR/USD Fundamentals

Monday (March 28)

• 8:30 US Core PCE Price Index. Estimate 0.2%
• 8:30 US Personal Spending. Estimate 0.2%
• 8:30 US Goods Trade Balance. Estimate -62.3B
• 8:30 US Personal Income. Estimate 0.1%
• 10:00 US Pending Home Sales. Estimate 1.2%

Upcoming Key Events

Tuesday (March 29)

• 10:00 US CB Consumer Confidence. Estimate 93.9 points

*Key events are in bold

*All release times are GMT

EUR/USD for Monday, March 28, 2016

EUR/USD March 28 at 7:40 GMT

Open: 1.1157 Low: 1.1150 High: 1.1173 Close: 1.1167

EUR/USD Technical

• EUR/USD has been flat in the Asian and European sessions
• 1.1087 continues to provide support
• 1.1172 is under strong pressure as resistance. This line could break during the day

Further levels in both directions:

• Below: 1.1087, 1.0941 and 1.0847
• Above: 1.1172, 1.1278, 1.1387 and 1.1495
• Current range: 1.1087 to 1.1172

OANDA’s Open Positions Ratio

EUR/USD ratio is almost unchanged, consistent with the lack of movement from EUR/USD. Short positions have a strong majority (56%), which is indicative of strong trader bias towards EUR/USD dropping to lower levels.

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.