EURUSD March 14 2016 Review:
The single currency may now repeat its December dynamics, when after jumping on the ECB meeting EUR/USD went sideways and stayed in range even after the Federal Reserve’s meeting. The bullish move in the euro could have been in many respects an overreaction. Next week the euro may face negative pressure if the market’s sentiment improves and if the expectations of the Fed’s rate hike this year strengthen. At the same time, the bears probably won’t risk too aggressive shorts (Elizabeth Belugina, fxbazooka).
In the meantime, the pair seems poised to end the week above the 1.1100 figure, also the 50% retracement of its latest bearish move. The technical indicators have advanced beyond their mid-lines, but lost upward strength, indicating limited upward strength at the time being, but far from suggesting a downward move ahead. Additionally, the pair has managed to recover above its 200 DMA that has been capping the upside for most of the past two weeks. In the weekly chart, there's a general positive tone, with the price above its 20 SMA and the technical indicators within positive territory, but there's no clear upward momentum either (Valeria Bednarik , fxstreet). EUR/USD rally and close above 1.1045 on increased volumes has forced us to abandon our expectation of further weakness. Risk is now skewed for further gains towards our targets near 1.1260 and then the 1.1380 highs (Barclays Capital, efxnews).
- Industrial Production: Monday, 10:00 .Euro-zone industrial output dropped by 1% in December in a disappointing outcome. After Germany’s surprisingly strong figure for January, a bounce is also on the cards for the all-European figure now: 1.7% is predicted.
- French Final CPI: Tuesday, 7:45. Prices in the second largest economy rose by 0.2%. This number will likely be confirmed now.
- Employment Change: Tuesday, 10:00. While the figure is lagging (it is for Q4) it still provides a wide view on the labor market situation. A rise of 0.3% was recorded in Q3. Another rise is on the cards now: 0.2% for Q4.
- CPI: Thursday, 10:00. According to the initial release, prices dropped 0.2% y/y in the headline figure and rose only 0.7% in core inflation. This certainly had its impact on the ECB. A confirmation is expected now. While the ECB decision is already behind us, a deterioration in inflation could open the door for more action, contradicting Draghi’s words.
- Trade Balance: Thursday, 10:00. Germany’s exports keep the euro bid with a positive trade balance. After +21 billion in December, a similar number is on the cards for January. A surplus of 20.2 billion is expected.
- German PPI: Friday, 7:00. Producer prices have fallen for quite some time. A drop of 0.7% was recorded last time, and yet another drop is likely now: -0.2%. (Yohay Elam, forexcrunch)
