EUR/USD – Euro Pushes Past 1.13, Eurozone Final CPI Contracts

EUR/USD continues to rally on Thursday, as the pair trades at 1.1320 in the European session. On the release front, Eurozone Final CPI dropped 0.2%, matching the forecast. There was better news from Core CPI, which posted a gain of 0.8%. It’s a busy day in the US, highlighted by the Philly Fed Manufacturing Index and Unemployment Claims.

Inflation levels continue to raise concerns about the health of the Eurozone economy, as Final CPI slipped by 0.2% in February, compared to a gain of 0.3% a month earlier. It was the key indicator’s worst showing since April 2015. Still, the euro has sparkled since Tuesday, surging over 200 points. EUR/USD is currently trading at 4-week highs. The euro gained ground following the Federal Reserve statement, which said that the Fed expected to raise rates only two times in 2016, compared to the four times projected in December 2015.

As expected, the Federal Reserve stood pat and did not raise interest rates at its policy meeting on Wednesday, maintaining the benchmark rate at 0.25%. The Fed statement noted that the US economy remains vulnerable to an uncertain global economy, but expects to raise rates later in the year due to moderate growth and “strong job gains”. The statement was dovish in tone, a clear departure from the December meeting, when the Fed raised rates for the first time in nine years and talked about four rate hikes over the course of 2016. In just a short three months, global demand has weakened, precipitated by the Chinese slowdown, and US numbers have cooled in comparison to the economy’s torrid pace in the second half of 2015. If inflation and employment numbers push higher in next several months, a rate hike in mid-2016 seems a good bet.

EUR/USD Fundamentals

Thursday (March 17)

• 9:02 Italian Trade Balance. Estimate 4.33B. Actual 0.04B
• 9:43 Spanish 10-year Bond Auction. Estimate 1.48%
• 10:00 Eurozone Final CPI. Estimate -0.2%. Actual -0.2%
• 10:00 Eurozone Final Core CPI. Estimate 0.7%. Actual 0.8%
• 10:00 Eurozone Trade Balance. Estimate 20.2B. Actual 21.2B
• 12:30 US Philly Fed Manufacturing Index. Estimate -1.4
• 12:30 US Unemployment Claims. Estimate 267K
• 12:30 US Current Account. Estimate -117B
• 14:00 US JOLTS Job Openings. Estimate 5.57M
• 14:00 US CB Leading Index. Estimate 0.2%
• 14:30 US Natural Gas Storage. Estimate -9B

*Key events are in bold

*All release times are GMT

EUR/USD for Thursday, March 17, 2016

EUR/USD March 17 at 7:10 GMT

Open: 1.1216 Low: 1.1203 High: 1.1342 Close: 1.1323

EUR/USD Technical

• EUR/USD was flat in the Asian session but has posted strong gains in European trade, breaking past two resistance lines
• 1.1278 has switched to support following strong gains by EUR/USD
• There is resistance at 1.1387

Further levels in both directions:

• Below: 1.1278, 1.1172 and 1.1087
• Above: 1.1387, 1.1495, and 1.1638
• Current range: 1.1278 to 1.1387

OANDA’s Open Positions Ratio

EUR/USD ratio has shown slight movement towards short positions, which have a strong majority (61%). This is indicative of strong trader reversing directions and heading 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.