Yesterday’s trade saw EUR/USD within the range of 1.0456-1.0621. The daily low has also been the lowest level since January 9th 2003, when a low of 1.0453 was recorded. The pair closed at 1.0569, gaining 0.81% on a daily basis.
At 8:09 GMT today EUR/USD was up 0.33% for the day to trade at 1.0603. The pair touched a daily high at 1.0615 at 7:55 GMT.
Fundamentals
Euro area
Consumer Inflation – final estimate
The final annualized consumer inflation in the Euro zone, evaluated in accordance with Eurostat’s harmonized methodology, probably confirmed the preliminary rate at -0.3% in February, which was reported on March 2nd. In January the final HICP reading pointed to annual inflation rate of -0.6%, which matched the preliminary estimate. The latter has been the lowest annual inflation since July 2009, when a rate of -0.6% was reported. According to the preliminary data, in February the higher inflation rate was influenced the most by services (up 1.1% year-on-year, compared to a 1.0% increase in January), followed by prices of food, alcohol & tobacco (up 0.5% year-on-year, compared with a 0.1% dip in January). On the other hand, downward pressure came from prices of non-energy industrial goods (down 0.2%, compared to a 0.1% fall in January) and energy costs (down 7.9%, compared to a 9.3% fall in January).
The index shows the change in price levels of a basket of goods and services from consumer’s perspective and also reflects purchasing trends. The main components of the HICP are food, alcohol and tobacco (accounting for 19% of the total weight), energy (11%), non-energy industrial goods (29%) and services (41%).
The HICP is used to evaluate and compare inflation rates between Member States, according to Art. 121 of the Amsterdam’s Agreement and directives by the European Central Bank (ECB), in order the latter to achieve price stability and implement monetary policy. The HICP aggregates are calculated as a weighted average of each member state’s HICP components.
In case the HICP climbed more than anticipated, thus, approaching the 2% inflation objective set by the ECB, this would support demand for the euro.
The final annualized Core HICP for February probably matched the preliminary core inflation estimate, which was reported at 0.6% on March 2nd. In January the annual core inflation was registered also at 0.6%. This index excludes volatile categories such as food, energy, alcohol and tobacco. Eurostat is scheduled to release the final inflation data at 10:00 GMT.
German, Euro area Economic Sentiment by the ZEW
The gauge of economic sentiment in Germany probably continued improving in March, rising to 58.2, according to the median forecast by experts, from 53.0 in February. If so, this would be the highest index reading since January 2014, when it was reported at 61.7.
The ZEW (Zentrum für Europäische Wirtschaftsforschung) economic expectations index is published on a monthly basis. The study encompasses up to 350 financial and economic analysts. The indicator reflects the difference between the share of analysts, that are optimistic and those, that are pessimistic about the expected economic development in Germany over the next six months. A positive value indicates that the proportion of optimists is larger than that of pessimists. A ZEW reading of -100 suggests that all analysts are pessimistic about the current developments and expect economic conditions to deteriorate. A ZEW reading of 100 implies that all analysts are optimistic about the current situation and expect conditions to improve. A ZEW reading of 0 indicates neutrality.
The index of current assessment in Germany probably rose a fifth month in a row in March, reaching a value of 50.0 in February, according to expectations. The gauge stood at 22.4 in the prior month. If so, this would be the highest level since July 2014, when a reading of 61.8 was reported.
The ZEW Economic Sentiment index for the whole Euro zone probably gained ground for a fifth straight month in March, reaching 58.2. If so, this would be the highest level since June 2014, when the indicator came in at 58.4. In February the index was at a level of 52.7.
In case the gauge of economic sentiment exceeded expectations, this would certainly have a positive impact on the common currency. The official data is scheduled to be released at 10:00 GMT.
United States
Housing Starts, Building Permits
The number of housing starts in the United States probably dropped to 1.049 million in February from the seasonally adjusted annual rate of 1.065 million during the prior month. Novembers figure has been influenced by a 5.4% drop in single-family homes. Single-family housing starts dropped 6.7% to 678 000 in January, offsetting a 12.1% increase in the multi-family segment. In January 2015 housing starts were 18.7% above the January 2014 level of 897 000. The January rate for units in buildings with five units or more was 381 000, according to the report by the US Census Bureau.
Housing Starts represent a gauge to measure residential units, on which construction has already begun, every month. A start in construction is defined as the foundation laying of a building and it encompasses residential housing primarily.
The number of building permits in the country probably increased to 1.065 million in February from a revised annual level of 1.053 million in January. If so, this would be the highest number of permits since October, when a level of 1.080 million was reported. Single-family authorizations in January were at a rate of 654 000, which represents a 3.1% drop compared to the revised December figure of 675 000. Authorizations of units in buildings with five units or more were at a rate of 372 000 in January.
Building permits are permits, issued in order to allow excavation. An increase in the number of building permits and housing starts usually occurs a few months after mortgage rates in the country have been reduced. Permits are not required in all regions of the United States. Building permits, as an indicator, provide information regarding demand in the US housing market. In case a higher-than-anticipated figure is reported, this will certainly support the US dollar. The official housing data is due out at 12:30 GMT.
Pivot Points
According to Binary Tribune’s daily analysis, the central pivot point for the pair is at 1.0549. In case EUR/USD manages to breach the first resistance level at 1.0641, it will probably continue up to test 1.0714. In case the second key resistance is broken, the pair will probably attempt to advance to 1.0806.
If EUR/USD manages to breach the first key support at 1.0476, it will probably continue to slide and test 1.0384. With this second key support broken, the movement to the downside will probably continue to 1.0311.
The mid-Pivot levels for today are as follows: M1 – 1.0348, M2 – 1.0430, M3 – 1.0513, M4 – 1.0595, M5 – 1.0678, M6 – 1.0760.
In weekly terms, the central pivot point is at 1.0621. The three key resistance levels are as follows: R1 – 1.0782, R2 – 1.1069, R3 – 1.1230. The three key support levels are: S1 – 1.0334, S2 – 1.0173, S3 – 0.9886.
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