EUR/USD – Euro Steady Ahead of Fed Minutes

EUR/USD is showing slight movement on Wednesday, as the pair trades at 1.0670 in the European session. There are no Eurozone events on the schedule. Over in the US, today’s key events are Building Permits and the Federal Reserve policy meeting minutes. On Thursday, there are two key events on the calendar – US Unemployment Claims and the Philly Fed Manufacturing Index.

The guessing game continues as to whether the Federal Reserve will kick off a series of rate hikes in December. Market expectations have risen to 66% that the Fed will make a move next month. The last time the Fed raised interest rates was in June 2006, so such a move is sure to have a significant effect on the global currency markets. With the US economy close to full employment and many economic indicators pointing upwards, one of the last pieces in the puzzle is inflation. Last week’s PPI was awful, posting a second straight decline. On Tuesday, CPI and Core CPI posted small gains of 0.2%, matching the forecast. Are these lukewarm readings enough to convince the Fed to make a move in December? The Fed has said that inflation levels are an important factor in determining its decision in December, but with US inflation stuck at low levels, it remains a guessing game as to whether the Fed will press the rate trigger at its next policy meeting.

The euro continues to struggle, as the currency trades at its lowest levels since April. Is parity with the US dollar on the horizon? Goldman Sachs apparently thinks so, as the well-respected global investment firm issued a report which projects the euro falling to parity by the end of 2015, and EUR/USD falling to 0.95 by the end of March 2016. ECB head Mario Draghi signaled last week that the ECB was considering further easing measures as early as December, and many analysts expect the ECB to introduce a new stimulus package in order to kick start an economy beset with low growth and a lack of inflation. If the ECB and the Fed both make moves in December, we could see the euro drop sharply.

EUR/USD Fundamentals

Wednesday (Nov. 18)

• 13:00 US FOMC Member William Dudley Speaks
• 13:30 US Building Permits. Estimate 1.15M
• 13:30 US Housing Starts. Estimate 1.16M
• 15:30 US Crude Oil Inventories. Estimate 2.0M
• 19:00 US FOMC Meeting Minutes

Upcoming Key Events

Thursday (Nov. 19)

• 13:30 US Unemployment Claims. Estimate 272K
• 15:00 US Philly Fed Manufacturing Index. Estimate 0.1 points

*Key releases are highlighted in bold

*All release times are GMT

EUR/USD for Wednesday, November 18, 2015

EUR/USD November 18 at 11:25 GMT

EUR/USD 1.0668 H: 1.0693 L: 1.0631

EUR/USD Technical

• EUR/USD was flat in the Asian session and has posted slight gains in European trading.
• 1.0732 is a weak resistance line.
• 1.0659 remains busy and has switched to a support line. It was tested earlier and could see further action during the day.
• Current range: 1.0659 to 1.0732

Further levels in both directions:

• Below: 1.0659, 1.05, 1.0359 and 1.0287
• Above: 1.0732, 1.0847 and 1.0941

OANDA’s Open Positions Ratio

EUR/USD ratio remains unchanged, reflective of the lack of significant movement from the pair. The ratio is evenly split between long and short positions. This indicates a lack of trader bias as to what direction the pair 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.