EUR/USD – Euro Steady Ahead of ECB Minutes

EUR/USD has ticked higher in the Thursday session, as the pair trades at 1.0640. On the release front, the ECB releases the minutes of its January monetary policy meeting. It’s another busy day in the US, with three key events on the calendar – Building Permits, Philly Fed Manufacturing Index and Unemployment Claims.

The spotlight was on Fed chair Janet Yellen earlier this week, as she made her semi-annual appearance before Congress. In her testimony, Yellen was upbeat about the US economy. She noted that inflation is moving towards the Fed’s 2 percent target, the labor market remains red-hot and consumer spending is strong. Yellen has an enviable task – when is the appropriate time to raise rates in order to cool down the economy – in June or as early as March? A rate hike is a question of “when” rather than “if”, as Yellen warned that “waiting too long to remove accommodation would be unwise”.  At the same time, the Fed needs to take into account the economic stance of the new administration, which remains unclear. President Trump has promised to outline a tax reform plan in a few weeks, but has left the Fed and the markets in the dark regarding economic policy. Unless the economy takes an unexpected turn downwards, it’s very likely that the Fed will press the rate trigger by June.

Across the pond, ECB President Mario Draghi can sleep easier, as the eurozone has been showing signs of recovery in recent months. The economy is expanding at a moderate rate, and inflation is pointing higher. This is good news for the ECB, which can now focus on possibly tightening monetary policy. If the ECB feels that the economic numbers will continue to point in the right direction, the central bank could taper its asset-purchase program or raise interest rates, which are currently at zero. ECB head Mario Draghi will likely remain cautious, with Brexit negotiations looming and elections in France and Germany coming up. Still, if the eurozone economy continues to grow and inflation levels move higher, we could see the ECB change its monetary stance later in the year. The ECB hold its next policy meeting on March 9, and if economic data remains steady, there will be pressure on the ECB to tighten monetary policy.

EUR/USD Fundamentals

Thursday (February 16)

• 00:15 US FOMC William Dudley Speech
• 9:00 Italian Trade Balance. Estimate 4.00B
• Tentative – Spanish 10-y Bond Auction
• 12:30 ECB Monetary Policy Meeting Accounts
• 13:30 US Building Permits. Estimate 1.23M
• 13:30 US Philly Fed Manufacturing Index. Estimate 18.5 points
• 13:30 US Unemployment Claims. Estimate 243K
• 13:30 US Housing Starts. Estimate 1.23M
• 15:30 US Natural Gas Storage. Estimate -130B

*All release times are EST

*Key events are in bold

EUR/USD for Thursday, February 16, 2017

EUR/USD February 16 at 4:20 EST

Open: 1.0602 High: 1.0641 Low: 1.0599 Close: 1.0637

EUR/USD Technical

EUR/USD has showed little movement in the Asian and European sessions

• 1.0616 is a weak support level
• 1.0708 is the next resistance line

Further levels in both directions:

• Below: 1.0616, 1.0506, 1.0414 and 1.0333
• Above: 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 Thursday session. Currently, long positions have a slight majority (53%), indicative of slight trader bias towards the euro continuing to move 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.