The euro has posted slight losses on Wednesday, continuing the lack of substantial movement that has characterized the pair so far this week. In the European session, EUR/USD is trading at 1.1350. On the release front, German Industrial Production dropped 0.5%, which was above expectations. Eurozone Retail PMI fell to 49.5 points. In the US, the Federal Reserve will deliver the minutes from its last policy meeting, and we’ll also hear from two Fed members, Loretta Mester and James Bullard. On Thursday, the US releases Unemployment Claims, and Janet Yellen and Mario Draghi will deliver speeches.
German manufacturing indicators continue to point to contraction in the manufacturing sector. German Industrial Production posted a decline of 0.5% in February, marking its third decline in four months. On Tuesday, German Factory Orders posted a sharp decline of 1.2%, a third consecutive decline. The German manufacturing sector has been hurt by the Chinese slowdown, as the Asian giant is one of Germany’s major exports markets. With no signs that weak global demand will improve anytime soon, Germany’s manufacturing sector will likely continue to sputter and also weigh on the Eurozone manufacturing sector. Meanwhile, there was no relief from Eurozone Retail PMI, which dipped to 49.2 points, pointing to contraction in consumer spending. This was the fourth contraction in five months, as worried European consumers are holding their purse strings tight.
Will the real Fed please stand up? The markets have been treated to mixed messages from the US central bank, and this lack of communication is certainly not looked well upon the markets. Last week, Janet Yellen sent the US dollar flying on its backside, following a surprisingly dovish speech in New York. EUR/USD surged some 230 points, as Yellen poured cold water on speculation of an April rate hike. Prior to her speech, several Fed members issued hawkish comments, some going as far as calling for a rate hike at the April policy meeting. Analysts will be paying close attention to the Fed minutes on Wednesday, looking for clues as to further rate projections. The markets are hoping the minutes will provide some clarity about the Fed’s monetary plans.
The release of the minutes should be treated as a market-mover, and we could see some volatility in the markets following this release. In addition to the minutes, two FOMC members will deliver remarks on Wednesday.
EUR/USD Fundamentals
Wednesday (April 6)
- 6:00 German Industrial Production. Estimate -1.8%. Actual -0.5%
- 8:10 Eurozone Retail PMI. Actual 49.2
- 14:30 US Crude Oil Inventories. Estimate 3.1M
- 16:20 US FOMC Member Loretta Mester Speaks
- 18:00 US FOMC Meeting Minutes
- 20:30 US FOMC Member James Bullard Speaks
Upcoming Key Events
Thursday (April 7)
- 12:30 US Unemployment Claims. Estimate 271K
- Tentative – ECB President Mario Draghi Speaks
- 21:30 US Fed Chair Janet Yellen Speaks
*Key events are in bold
*All release times are GMT
EUR/USD for Wednesday, April 6, 2016
EUR/USD April 6 at 10:10 GMT
Open: 1.1380 Low: 1.1340 High: 1.1386 Close: 1.1347
EUR/USD Technical
| S1 | S2 | S1 | R1 | R2 | R3 |
| 1.1087 | 1.1172 | 1.1278 | 1.1378 | 1.1495 | 1.1609 |
- EUR/USD has posted small gains in the Asian an European sessions
- 1.1378 was tested earlier in resistance and remains under strong pressure. This line could break during the day
- 1.1278 is providing strong support
Further levels in both directions:
- Below: 1.1278, 1.1172 and 1.1087
- Above: 1.1378, 1.1495, 1.1609 and 1.1712
- Current range: 1.1278 to 1.1378
OANDA’s Open Positions Ratio
EUR/USD ratio is showing little movement, consistent with the lack of movement we’re seeing from EUR/USD. Short positions have a strong majority (66%), indicative of strong trader bias towards EUR/USD breaking out and moving to lower levels.