EUR/USD – Euro Shrugs off Dismal German Factory Orders

EUR/USD has ticked lower in the Tuesday session. Currently, the pair is trading at 1.0560. On the release front, German Factory Orders declined 7.4%, well below the estimate of a 2.5% decline. Eurozone Revised GDP remained unchanged at 0.4%, matching the forecast. In the US, today’s highlight is Trade Balance, with an expected deficit of 47.0 billion. On Wednesday, the US releases ADP Nonfarm Employment Change, ahead of the official Nonfarm Payrolls report on Friday.

After some solid data last week, German numbers have looked dreadful early in the week. The markets were braced for a soft reading from Factory Orders in February, but the sharp drop of 7.4% was much worse than expected. On Monday, 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. The euro has held steady despite these weak readings, but if the negative trend continues from the Eurozone’s largest economy, investors could get edgy and the euro could again head south towards the 1.05 level.

Donald Trump continues to create controversy on an almost basis, much to the consternation of the markets. Still, the dollar remains strong, buoyed by a strong economy and the increasing likelihood of a rate hike at the upcoming Fed policy meeting on March 15. The likelihood of a March hike has jumped to 84%, according to the CME group, compared to 33% just a week ago. Why the huge jump in odds? One reason is that Fed policymakers have sent out strong hints that the Fed is leaning towards raising rates next week. Earlier in the year, the Fed sent out signals Fed sent out signals that it would stay on the sidelines until it had a clearer picture of Trump’s economic agenda, such as an outline of tax reform or fiscal spending plans. That has changed, as the Fed appears poised to move ahead despite the lack of any details about the administration’s economic policy. This week’s job numbers will be critically important, as strong numbers will likely boost the odds of a March move as well as push the greenback to higher levels.

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EUR/USD Fundamentals

Tuesday (March 7)

• 2:00 German Factory Orders. Estimate -2.5%. Actual -7.4%
• 2:45 French Government Budget Balance. Actual -5.4B
• 5:00 Eurozone Revised GDP. Estimate 0.4%. Actual 0.4%
• 8:30 US Trade Balance. Estimate -47.0B
• 10:00 US IBD/TIPP Economic Optimism. Estimate 57.1
• 15:00 US Consumer Credit. Estimate 19.1B

Wednesday (March 8)

• 8:15 US ADP Nonfarm Employment Change. Estimate 184K

*All release times are EST

*Key events are in bold

EUR/USD for Tuesday, March 7, 2017

EUR/USD March 7 at 5:10 EST

Open: 1.0579 High: 1.0603 Low: 1.0557 Close: 1.0561

EUR/USD Technical

EUR/USD was flat in the Asian session and has edged lower 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: 1.0616 to 1.0708

OANDA’s Open Positions Ratio

EUR/USD ratio is unchanged in the Tuesday session. Long and short positions are almost evenly 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.