EUR/USD: Edging Higher as Investors Await Fresh Data on US Labor, Manufacturing

Highlights

• EUR/USD up 0.12% as investors wait for US data and Fed signals
• Eurozone trade surplus due to increase in exports from Germany and Italy
• US central bank to raise rates in May and keep them steady for rest of 2023

Overview

The Euro is edging higher against the U.S. Dollar on Thursday in a mostly directionless trade, Investors are awaiting more signals on the strength of the economy from fresh data on U.S. labor and manufacturing. Federal Reserve officials could also reveal more about the direction of interest rates before they enter their quiet period on April 22.

At 11:43 GMT, the EUR/USD is trading at 1.0969, up 0.0013 or +0.12%. On Wednesday, the Invesco CurrencyShares Euro Trust ETF (FXE) settled at $101.15, down $0.16 or -0.16%.

Traders Await Fresh US Economic Data

At 12:30 GMT, government data is expected to show weekly unemployment claims rose to 240K from 239K and the Philly Fed Manufacturing Index is expected to show an improvement from minus 23.2 to minus 19.1. Existing Home Sales, due to be released at 14:00 GMT, is expected to show a slight decline from 4.58M to 4.50M.

Euro Zone Records Trade Surplus

The euro zone shifted from a deficit to a trade surplus in February, according to non-adjusted data released on Thursday. This was attributed to increased exports of machinery and chemicals, with the majority of the improvement coming from Germany and Italy. In February, the seasonally unadjusted trade balance for the 20 euro-sharing countries stood at 4.6 billion euros, compared to a deficit of 9.4 billion euros in the same period last year, according to Eurostat.

US Fed to Raise Rates, Inflation Still Problematic

According to a Reuters poll of economists, the US Federal Reserve is expected to raise interest rates by 25 basis points in May and then maintain the same rates for the remainder of 2023.

Fed Bank of New York President John Williams said on Wednesday that inflation is still at problematic levels and the U.S. central bank will act to lower it.

Technical Analysis

From a daily technical viewpoint, the EUR/USD is trading on the strong side of its daily pivot at $1.0763, but under the R1 level at $1.1009. The long-term technicals appear to be in favor of an upside move, but the short-term outlook indicates potential weakness.

A sustained move over R1 at $1.1009 will indicate the buying is getting stronger. This could lead to a near-term acceleration to the upside. However, a sustained move under R1 will indicate the short-term selling pressure is getting stronger. The pivot at $1.0763 the closest major target.

For a look at all of today’s economic events, check out our economic calendar.