EUR/USD is showing limited movement on Wednesday, as the pair trades slightly below the 1.38 line in the European session. On the release front, Spanish Unemployment Change dropped to a three-month low and easily beat the estimate. Today’s highlight is ADP Nonfarm Payrolls, a key indicator.
Here is a quick update on the technical situation, indicators, and market sentiment that moves euro/dollar.
- EUR/USD touched a high of 1.3816 in the Asian session, but was unable to maintain these gains and has dropped back below the 1.38 line.
Current range: 1.3740 to 1.38.
- Below: 1.3740, 1.37, 1.3650 and 1.3560, 1.3515 and 13450.
- Above: 1.38, 1.3830, 1.3895, 1.3940, and 1.40
- 1.3740 is an important support line. The round number of 1.37 follows.
- On the upside, the pair is again testing the 1.38 line. 1.3830 follows.
- 7:00 Spanish Unemployment Change. Estimate -5.3K, actual -16.6K.
- 9:00 Eurozone Final GDP. Estimate 0.3%.
- 9:00 Eurozone PPI. Estimate 0.0%.
- Day 2 – ECOFIN Meetings.
- 12:15 US ADP Nonfarm Employment Change. Estimate 192K. See how to trade this event with USD/JPY.
- 14:00 US Factory Orders. Estimate 1.3%.
- 14:30 US Crude Oil Inventories. Estimate 1.3M.
*All times are GMT For more events and lines, see the Euro to dollar forecast.
- Spanish employment numbers surprise markets: Spanish Unemployment Change is well-known for its sharp fluctuations, resulting in market forecasts that are often well off the mark. The February release was no exception, as the reading of -16.6 thousand was much better than the estimate of -5.3 thousand. The indicator has rolled off four declines in the past five releases, which points to some improvement in the Spanish economy. Spanish Manufacturing PMI met expectations on Monday, and we’ll get a look at Services PMI on Thursday.
- German numbers point upwards: German data continues to look solid. On Tuesday, Retail Sales posted a strong gain of 1.3%, cruising past the estimate of -0.5%. February’s German Unemployment Change continues to show improvement, as the indicator dropped to -12 thousand, down from -14 thousand a month earlier. German Consumer Climate and Business Climate also looked sharp in February, pointing to stronger confidence in the German economy, the largest in the Eurozone.
- Yellen says US economy has long way to go: On Monday, Fed chair Janet Yellen surprised the markets with a dovish outlook regarding the Fed’s monetary plans. She said that inflation and employment levels needed to improve considerably, and the Federal Reserve would continue to provide monetary stimulus for some time. Currently, the Fed is purchasing $55 billion in assets under its QE scheme. There have been three tapers to QE so far, and Yellen plans to wind up the program in the fall, provided that the US economy does not run into any serious turbulence. At the same time, the Federal Reserve has stated that it has no plans to raise interest rates until sometime in 2015.
- ECB mulls negative rates, QE: Last week, German Bundesbank head Jens Weidmann gave support to a negative deposit rate in order to respond to the strong euro. He also raised the possibility of a QE scheme for the ECB, whereby the central bank would purchase loans or other assets in order to fight deflation, which continues to suffer from low inflation. Mario Draghi also spoke on the issue, saying that the ECB is ready to act if inflation slips further.