EUR/USD – Euro Steady Ahead of Yellen Speech

EUR/USD is showing limited movement on Tuesday, as the pair trades at the 1.12 line in the European session. On the release front, Eurozone M3 Money Supply remained steady at 5.0%, while Private Loans improved to 1.6%. Over in the US, CB Consumer Confidence is forecast to climb to 93.9 points. Federal Reserve Janet Yellen will deliver remarks at the Economic Club in New York City.

US economic growth in the fourth quarter was respectable, but there are signs that we could see softer numbers for the first quarter of 2016. The Atlanta Fed downgraded its forecast for Q1 from 1.4 percent to 0.6 percent. The original forecast, released just last week, was lowered in response to a downgraded forecast of personal income and outlays by the US Bureau of Economic Analysis. US Final GDP for the fourth quarter rose 1.4 percent, above the estimate of 1.0%, but lower than the 2.0 percent gain in the third quarter. If US economic activity did in fact weaken in Q1, we could see the US dollar lose ground.

After a dovish policy statement from the Fed earlier this month, an interest rate hike did not seem likely before June. However, a flurry of hawkish statements from Federal Reserve members last week caught the markets by surprise and resulted in broad gains for the dollar, as the euro slipped 150 points. With some Fed members calling for a rate hike as early as April, the markets will be looking for some guidance from Fed chair Janet Yellen, who will make a speech in New York later on Tuesday. If Yellen does not rule out an April move, speculation of an imminent rate hike will increase, and the US dollar could respond with broad gains.

EUR/USD Fundamentals

Tuesday (March 29)

• 8:00 Eurozone M3 Money Supply. Estimate 5.0%. Actual 5.0%
• 8:00 Eurozone Private Loans. Estimate 1.4%. Actual 1.6%
• 13:00 US S&P/CS Composite-20 HPI. Estimate 5.7%
• 14:00 US CB Consumer Confidence. Estimate 93.9
• 16:20 US Federal Reserve Chair Janet Yellen Speaks

Upcoming Key Events

Wednesday (March 30)

• All Day – German Preliminary CPI. Estimate 0.6%
• 12:15 ADP Nonfarm Employment Change. Estimate 194K

*Key events are in bold

*All release times are DST

EUR/USD for Tuesday, March 29, 2016

EUR/USD March 29 at 7:55 DST

Open: 1.1201 Low: 1.1168 High: 1.1201 Close: 1.1200

EUR/USD Technical

• EUR/USD was flat in the Asian session and has posted slight losses in European trade
• There is resistance at 1.1278
• 1.1172 remains busy and has switched to a support role. It is a weak line

Further levels in both directions:

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

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 (54%), 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.