EUR slips back to support level in Monday’s session (April 03), trading range remains between 1.0600-1.0935.

FX Positioning-

According to Shuaib Chowdhary, at Deutsche Bank “IMM Commitment of Traders data suggests EUR, speculators pared their shorts by 50%, taking EUR shorts to their lowest level since May 2014.

According to the TFF report, leveraged funds scaled back their USD longs by a third while asset managers almost doubled their shorts. Leveraged funds continued to cut their EUR shorts and asset managers continued to extend their EUR longs”.

Review:

ING-EUR bulls faced a reality check last week; the ECB stuck to the dovish script and kept tight-lipped over QE taper talk.

  • Final Eurozone Manufacturing PMI at 56.2 in March, the highest reading since April 2011
  • Euro area annual inflation down to 1.5% in March 2017, down from 2.0% in February 2017
  • The February turnover was in real terms 1.8% and in nominal terms 2.3% larger than that in January 2017.
  • Germany consumer prices are expected to increase by 0.2% in February 2017
  • The Ifo Business Climate Index rose to 112.3 points in March from 111.1 last month

Preview: ECB and FOMC minutes will be watched

Tues, April 04

The second TV debate ahead of the first round of the French presidential election

ECB President Draghi Speaks at  the European Central Bank’s launching of the new €50 banknote, in Frankfurt

Wed, April 05

Services PMI readings from Spain, Italy, French, Germany and EA

Thurs, April 06

German Factory Orders m/m forecast 3.5% vs -7.4%

ECB minutes

Deutsche Bank- The ECB minutes should help the market reassess the expected path for monetary policy and the FOMC minutes should provide clarity on the extent of the discussion of balance sheet reduction.

ECB President Draghi Speaks at the Watchers Conference organised by Goethe University, in Frankfurt

Friday, April 07

Germany and French Industrial Production

Germany and French Trade balance

On U.S, ADP Non-Farm Employment data, FOMC Meeting Minutes (April 05) and Non-farm payroll on April 06 are the key risk events scheduled this week.

Barclays: US nonfarm payrolls are expected to increase by 20 million in March, with an average hourly wage increase of 0.3%, up 2.6% year on year and unemployment is expected to fall by 0.1 percentage point to 4.6%.

The FOMC minutes should provide clarity on the extent of the discussion of balance sheet reduction.

ING – Mar FOMC minutes (Wed) will give some insight into the likelihood of a June rate hike (around 50% priced in).

FX outlook:

EURUSD snaps the four-day falling streak manages to close with marginal gains on Monday session (April 03). Ahead of the ECB and FOMC minutes, the price has potential support finds at 1.0600/1.0580, 1.0500/1.0490 and 1.0450 levels. Resistance seems at 1.0700, 1.0760 and 1.0825.

The daily 200 moving averages seem between 1.0820 and 1.0870 above these. 1.0930 its 50Wsma exists. Bulls can feel comfortable only after crossing 1.0700 decisively, aims at 1.0760 initially.

Selling accelerates below 1.0450, next destination finds at 1.0400 and 1.0360.