EUR/USD – Euro Subdued as Investors Look for Cues

The euro continues to have a quiet week. In the Tuesday session, EUR/USD is trading at 1.2354, up 0.14% on the day. On the release front, it’s a light day for fundamentals, with non major indicators. In the eurozone, Retail PMI improved to 52.3, pointing to slight expansion. On Wednesday, the eurozone releases revised GDP, and the US will publish ADP nonfarm payrolls.

The ECB will be on center stage on Thursday, as the Bank will set the benchmark rate, followed by a press conference with Mario Draghi. The interest rate has been pegged at a flat 0.0% for the past two years, and no change is expected. The markets will be keeping a close eye on the language of the rate statement, in particular, whether the easing bias stance will be removed. If so, this would likely be interpreted as a plan to eventually tighten policy and would be bullish for the euro. Inflation remains weak, so there is little pressure on the ECB to tighten policy anytime soon. Recent indicators show that inflation in the eurozone is steady, but remains well below the ECB target of around 2 percent. Eurozone CPI dipped to 1.2% in February, down from 1.3% in January.

The “tariff tussle” shows no sign of being resolved anytime soon. US President Trump appears set on applying stiff tariffs on steel imports, much to the consternation of the European Union and other US trading partners. However, there is plenty of domestic opposition to Trump’s plan, as Republican lawmakers, including House Speaker Paul Ryan, have come out strongly against the move. If Trump doesn’t back down, the Republicans could even resort to legislation to limit Trump’s authority on tariffs. The announcement of the tariffs briefly sent the dollar lower, and if the tariffs are introduced, negative investor sentiment could send the greenback to lower levels.

I won’t back down

EUR/USD Fundamentals

Tuesday (March 6)

• 4:10 Eurozone Retail PMI. Actual 52.3
• 7:30 US FOMC Member William Dudley Speaks
• 10:00 US Factory Orders. Estimate -0.4%
• Tentative – IBD/TIPP Economic Optimism. Estimate 58.2
• 17:30 US FOMC Member Lael Brainard Speaks

Wednesday (March 7)

• 2:45 French Trade Balance. Estimate -3.7B
• 5:00 Eurozone Revised GDP. Estimate 0.6%
• 8:15 US ADP Nonfarm Employment Change. Estimate 194K

*All release times are GMT

*Key events are in bold

EUR/USD for Tuesday, March 6, 2018

EUR/USD for March 6 at 6:20 EDT

Open: 1.2336 High: 1.2363 Low: 1.2328 Close: 1.2354

EUR/USD Technical

EUR/USD edged higher in the Asian session and has ticked higher European trade

• 1.2286 is providing support
• 1.2357 was tested earlier in resistance and remains under strong pressure. It could break during the Tuesday session

Further levels in both directions:

• Below: 1.2286, 1.2200, 1.2092 and 1.2025
• Above: 1.2357, 1.2460, 1.2581
• Current range: 1.2286 to 1.2357

OANDA’s Open Positions Ratio

EUR/USD ratio is almost unchanged this week. Currently, short positions are showing a majority (59%), indicative of EUR/USD reversing directions and heading to lower ground.

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