Yesterday’s trade saw EUR/USD within the range of 1.1103-1.1180. The pair closed at 1.1120, shedding 0.22% on a daily basis. It has been the 17th drop in the past 33 trading days and also a fourth consecutive one. The daily low has been the lowest level since February 8th, when a low of 1.1084 was registered.
At 7:22 GMT today EUR/USD was edging up 0.19% for the day to trade at 1.1141. The pair touched a daily high at 1.1150 at 6:40 GMT, overshooting the range resistance level (R3), and a daily low at 1.1119 during the early phase of the Asian trading session.
On Thursday EUR/USD trading may be influenced by the following macroeconomic reports as listed below.
Fundamentals
Euro area
ECB Monetary Policy Accounts
At 12:30 GMT the European Central Bank is expected to release the accounts from its latest policy meeting, held on January 21st. This document offers a fair and balanced reflection of policy deliberations, with its objective being to provide the rationale behind monetary policy decisions and let the public receive a better understanding of the ECB Governing Council’s assessment of macroeconomic conditions.
The key refinancing rate was left intact at the record low level of 0.05% in line with market expectations. The rates on the marginal lending facility and the deposit facility were also kept unchanged at 0.30% and -0.30%, respectively. However, policy makers hinted over a re-examination of monetary policy measures in March, due to a worse outlook for economic growth and inflation pressure in the region.
In a statement taken on February 15th before the European Parliament’s Economic and Monetary Affairs Committee, the ECB President Mario Draghi underscored that financial market turmoil and the continuing decline in prices of oil were having an adverse impact on inflation expectations.
According to extracts from the Introductory Statement, offered by Mario Draghi earlier in the present month: ”As we announced at the end of our last monetary policy meeting in January, the Governing Council will review and possibly reconsider the monetary policy stance in early March. The focus of our deliberations will be twofold. First, we will examine the strength of the pass-through of low imported inflation to domestic wage and price formation and to inflation expectations. This will depend on the size and the persistence of the fall in oil and commodity prices and the incidence of second-round effects on domestic wages and prices.”
”Second, in the light of the recent financial turmoil, we will analyse the state of transmission of our monetary impulses by the financial system and in particular by banks. If either of these two factors entail downward risks to price stability, we will not hesitate to act.”
In case the Monetary Policy Accounts were to present a hawkish macroeconomic outlook, the common currency would receive support, while a dovish outlook would usually lead to a sell-off.
United States
Initial, Continuing Jobless Claims
The number of people in the United States, who filed for unemployment assistance for the first time during the business week ended on February 12th, probably increased to 275 000, according to market expectations, from 269 000 reported in the preceding week. The latter has been the lowest number of claims since the business week ended on December 18th, when 267 000 claims were reported.
The 4-week moving average, an indicator lacking seasonal effects, was 281 250, marking a decrease by 3 500 compared to the preceding weeks unrevised average.
The business week, which ended on February 5th has been the 48th consecutive week, when jobless claims stood below the 300 000 threshold, which implied a healthy labor market.
Initial jobless claims number is a short-term indicator, reflecting lay-offs in the country. In case the number of claims met expectations or rose further, this would have a moderate bearish effect on the US dollar.
The number of continuing jobless claims probably increased to the seasonally adjusted 2 250 000 during the business week ended on February 5th from 2 239 000 in the preceding week. The latter represented a decrease by 21 000 compared to the revised up number of claims reported in the week ended on January 22nd. This indicator reflects the actual number of people unemployed and currently receiving unemployment benefits, who filed for unemployment assistance at least two weeks ago.
The Department of Labor is to release the weekly report at 13:30 GMT.
Philadelphia Fed Manufacturing PMI
The Philadelphia Fed Manufacturing Index probably remained in negative territory for a third consecutive month in February, coming in at a reading of -2.8, according to the median forecast by experts. In January the gauge stood at -3.5. The index is based on a monthly business survey (the Business Outlook Survey), measuring manufacturing activity in the third district of the Federal Reserve, Philadelphia. Participants give their opinion about the direction of business changes in overall economy and different indicators of activity in their companies, such as employment, working hours, new and existing orders, deliveries, inventories, delivery time, price etc. The survey is conducted every month since May 1968. The results are presented as the difference between the percentages of positive and negative projections. A level above zero is indicative of improving conditions, while a level below zero is indicative of worsening conditions. In case the index improved more than projected, this would have a moderate bullish effect on the greenback. The Federal Reserve Bank of Philadelphia is expected to release the official results from the survey at 13:30 GMT.
Leading Economic Index by the CB
The Conference Board Leading Economic Index for the United States probably dropped for a second straight month in January, going down at a monthly rate of 0.2%, according to the median estimate by experts. In December the index went down another 0.2%.
It encompasses a variety of economic indicators, which signify possible changes in overall economic activity. The index is comprised by the following components: average weekly hours in manufacturing, average weekly initial claims for unemployment insurance, manufacturers’ new orders, consumer goods and materials, ISM Index of New Orders, manufacturers new orders, non-defense capital goods excluding aircraft orders, building permits, new private housing units, Stock prices, 500 common stocks, Leading Credit Index, interest rate spread, 10-year Treasury bonds less federal funds, average consumer expectations for business conditions. A worse-than-expected performance of the index would have a moderate bearish effect on the US dollar. The Conference Board research group will release the official report at 15:00 GMT.
Daily and Weekly Pivot Levels
By employing the Camarilla calculation method, the daily pivot levels for EUR/USD are presented as follows:
R1 – 1.1127
R2 – 1.1134
R3 (range resistance) – 1.1142
R4 (range breakout) – 1.1162
S1 – 1.1113
S2 – 1.1105
S3 (range support) – 1.1098
S4 (range breakout) – 1.1078
By using the traditional method of calculation, the weekly pivot levels for EUR/USD are presented as follows:
Central Pivot Point – 1.1241
R1 – 1.1397
R2 – 1.1535
R3 – 1.1691
S1 – 1.1103
S2 – 1.0947
S3 – 1.0809
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