EUR/USD - Euro Choppy, ECB Minutes Next

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Includes: FXE, UDN, UUP
by: Dean Popplewell

By Kenny Fisher

The euro is showing some volatility on Thursday. In the European session, EUR/USD is trading at the 1.14 line. On the release front, the ECB releases the minutes of its March policy meeting. As well, ECB president Mario Draghi will deliver remarks in Lisbon. The US will publish Unemployment Claims and Fed chair Janet Yellen will speak at an event in New York.

On Wednesday, the ECB will release its policy meeting accounts, which is a detail record of the March policy meeting. At that meeting, the ECB took significant monetary steps, lowering all three of its interest rates and increasing its asset-purchase program (QE) from EUR 60 billion to 80 billion/mth. The main refinancing rate was cut from 0.05% to a flat 0.0%. The ECB has pumped some EUR 700 billion into its asset-purchase program, but the results of been disappointing, as growth and inflation levels have not improved. The minutes could provide some insight as to possible steps the ECB has in mind (if any) at its policy meeting later this month. We’ll hear from Mario Draghi later in the day, and the ECB head has often moved the markets with his comments, so EUR/USD could show further volatility on Thursday.

The Federal Reserve released the minutes of its March policy meeting on Wednesday. The minutes indicate that the Fed is unlikely to raise rates before June at the earliest. Although some policymakers expressed approval for a rate hike in April, others expressed concern about the risks to the US economy posed by global economic conditions. There was a split amongst members as to whether the recent pickup in inflation was sustainable. Many Fed members were worried about the lack of options available to the Fed since rates remain close to zero. This concern can have significant impact on the currency markets, since the dollar could strengthen if the Fed is unable to implement effective easing measures. The minutes appear to be a validation of Janet Yellen’s remarks last week, which were very dovish and dampened growing enthusiasm about a rate hike as early as April. Bottom line? There is a strong likelihood that the Fed will raise rates twice in 2016, but the timetable of any moves is unclear. Yellen speak later on Thursday in New York, and the markets will be carefully monitoring her comments, looking for clues as to the Fed’s rate plans.

EUR/USD Fundamentals

Thursday (April 7)

  • 6:45 French Trade Balance. Estimate -3.8B. Actual -5.2B
  • Tentative – Spanish 10-year Bond Auction
  • Tentative – French 10-year Bond Auction
  • 11:30 ECB Monetary Policy Meeting Accounts
  • 12:30 US Unemployment Claims. Estimate 271K
  • Tentative – ECB President Mario Draghi Speaks
  • 14:30 US Natural Gas Storage. Estimate 7B
  • 19:00 US Consumer Credit. Estimate 15.0B
  • 21:30 US Fed Chair Janet Yellen Speaks

*Key events are in bold

*All release times are GMT

EUR/USD for Thursday, April 7, 2016

EUR/USD April 7 at 9:45 GMT

Open: 1.1400 Low: 1.1358 High: 1.1454 Close: 1.1399

EUR/USD Technical

S1 S2 S1 R1 R2 R3
1.1172 1.1278 1.1378 1.1495 1.1609 1.1712
Click to enlarge
  • EUR/USD was uneventful in the Asian session. In European trade, the pair posted gains but has reversed directions and posted sharp losses
  • 1.1378 remains busy and is providing weak support. It could see further action during the day
  • 1.1495 is an immediate resistance line

Further levels in both directions:

  • Below: 1.1378, 1.1278, 1.1172 and 1.1087
  • Above: 1.1495, 1.1609 and 1.1712
  • Current range: 1.1378 to 1.1495

OANDA’s Open Positions Ratio

EUR/USD ratio is unchanged on Thursday. Short positions have a strong majority (66%), indicative of strong trader bias towards EUR/USD breaking out and moving 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.